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On the Dual Nature of Weak Property Rights

Author

Listed:
  • Louis Hotte

    (Department of Economics, University of Ottawa, Ottawa, ON)

  • Randy McFerrin

    (New Mexico State University, U.S.A.)

  • Douglas Wills

    (University of Washington)

Abstract

In the natural resource literature, convertional wisdom holds that weak property rights will cause a resource to be over-exploited. This is because weak property rights are typically perceived as a problem of input exclusion. In this paper, we first present evidence to the effect that weak property rights often take the form of contestable output- or output theft - and that this has an impact or resource use. We then propose a theoretical model of natural resource use under generally weak prperty rights - or weak state presence - when resource users face the dual problem of input exclusion output appropriation. We show that introducing the possibility that outputs can be contested acts as an output tax, with the added twist that resource users effectively determine the level of the tax. This tax has a depressive effect on input use. As a result, whether the resource is under-or over-exploited in equilibrium will depend on the relative severity of output appropriation and input exclusion problems when property rights are generally weak.

Suggested Citation

  • Louis Hotte & Randy McFerrin & Douglas Wills, 2011. "On the Dual Nature of Weak Property Rights," Working Papers 1103E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:1103e
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Property rights and natural resources
      by Economic Logician in Economic Logic on 2011-06-24 19:35:00

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    Cited by:

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    2. Stuart John Barton, 2016. "Policy Signals and Market Responses," Palgrave Studies in the History of Finance, Palgrave Macmillan, number 978-1-137-39098-1, February.
    3. Rodriguez, Mauricio & Smulders, Sjak, 2022. "Dynamic resource management under weak property rights: A tale of thieves and trespassers," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    4. Rodriguez Acosta, Mauricio, 2016. "Essays in political economy and resource economic : A macroeconomic approach," Other publications TiSEM 1e39ef1b-43a2-4f95-892c-6, Tilburg University, School of Economics and Management.

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    More about this item

    Keywords

    Natural Resources; Property Rights; Trespass; Theft; Over-Exploitation; Under-Exploitation;
    All these keywords.

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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