By Gordon Hull
I’m going to be teaching Harold Demsetz’s “Toward a Theory of Property Rights” (1967) tomorrow, and noticed a couple of things that I hadn’t before. I suspect they’re related, and say something about the moment the article appeared. At least, that’s what I want to propose here. To set it up: Demsetz is known for the theory that property rights emerge when it is efficient to internalize externalities. His example is land rights among Native Americans; he says that property in land increases with the arrival of the fur trade. Absent land rights, there was always a risk in overly intensive hunting occurring: without private property, it is in nobody’s interest to invest in the growth and maintenance of hunting stock. Before the arrival of Europeans, this was fine because there was no particular incentive to hunt too intensively. When the European fur trade arrived however, the incentives to intensive hunting grew, and property rights emerged as a management strategy. If I have to live with the consequences of depletion of the hunting stock on my land, I’ll have the incentive to manage it correctly. That, at least, is the story. It’s quasi descriptive in the sense that Demsetz thinks this is an explanation for why we have property regimes, and somewhat normative in that it’s clear between the lines that he thinks private property is a good way to go. Here’s the observations: first, the piece is heavily reliant on Ronald Coase, and second, although the narrative sounds like a tragedy of the commons narrative, it actually flies in the face of what Hardin was trying to do in that article.
Continue reading "Hardin vs. Demsetz, or The Tragedy of the Commons versus the Economists" »
Recent Comments