Institutional theory of property rights
Property rights are the powersindividual individuals or groups of individuals use resources. This relationship between people, which arises in connection with the availability of goods and their further use.
The theory of property rights determines the norms of people's behavior about the benefits. Their non-compliance causes a significant increase in costs.
It should also be noted that the relationshipProperty comes from the problem of resource scarcity. Establishment of powers allows to limit and regulate conflicts over the use of specific resources. They reduce the uncertainty of the economic environment, make it more predictable. The rights are protected by a complex of traditions, unwritten customs.
The theory of property rights is related to the behavior of the economic entity. However, prohibitions and restrictions do not ensure the unambiguous implementation of these prescriptions.
Institutional theory of property rightsconsiders the exchange of rights as the exchange of points of power, which includes eleven elements: possession, management, use, rights to income, the capital value of the thing, security, the transfer of property under a will or inheritance, liability in the form of recovery, perpetuity, waiting for a natural return , prohibition of harmful use.
The specification implies an accurate definitionall the powers of the owner. If the set of rights is clearly defined, but there is insufficient protection, the risk of uncertainty increases. In the real world, there can not be 100 percent protection and specification of powers, because this requires complete, comprehensive information.
Blurring takes place when inaccurately established rights, or the powers fall under restrictions that reduce the effectiveness of the use of resources and their value.
The Coase Theorem
According to Coase, externalities (external effects)arise when the powers are unclear. He blames the market for the existence of failures. Therefore, it is necessary to improve the legislation. If all the same the market failures remain, then the state is to blame for this.
The theory of property rights through the theorem of Coaseshows that the problem is not in the presence of private property, but in its shortcomings. Transaction costs play a key role here. In the event that they are equal to zero, legal regulation is necessary. When they are positive, the distribution of rights ceases to be neutral. It begins to influence the structure of production and its effectiveness. Thus, the economic theory of property rights, in particular the Coase theorem, opens new approaches to understanding the role of the state.
The main achievements of the theory
The theory of property rights was recognized in explicit formavailability of alternative property systems. There are three main legal regimes. Under private ownership, an individual is the owner. His word in the decision of any questions of use of resources is considered as the final. Thus, individuals are privileged in terms of access to certain resources: it is open only to the owner or persons to whom he has delegated or transferred the powers. Under state ownership, access to scarce resources is ensured on the basis of the collective interest of society. In fact, no one has a privileged position, since no one's personal interest is considered sufficient for the use of any resource. With common property, no one has a privileged position, but access to benefits is open to all.