lecture 9.ppt - Econ 522 Economics of Law Dan Quint Fall...

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Econ 522 Economics of Law Dan Quint Fall 2019 Lecture 9
2 Second homework due next Monday night First midterm next Thursday (Oct 10) sample problems on Canvas, along with answers to some Logistics
3 Limitations and Exceptions to Property Rights
4 Limitations we’ll see: How you can lose ownership of your property by neglecting it – adverse possession When someone can violate your property rights without being punished – private necessity Limitations on how you can use/sell your property – unbundling, prohibition on perpetuities How the government can force you to sell your property even if you don’t want to – eminent domain Restrictions the government can place on how you use your property – regulation – but we’ll also see limits on regulation Lots of ways in which property rights are not absolute
5 Property: “a bundle of rights” Can you unbundle them? Separate them, sell some and keep others Usually, no Prohibition on perpetuities I can’t separate the right to own/live on my land from the right to sell it or turn it into a golf course But in some instances, yes… Unbundling
6 Land ownership consisted of three separable pieces (“ estates ”) Surface estate Support estate Mineral estate Example of unbundling: Pennsylvania and coal
7 Free unbundling of property rights generally not allowed Civil law more restrictive than common law For efficiency… In general, efficiency favors more complete property rights People would only choose to unbundle property when that increases its value, so we should allow it? Unbundling
8 Free unbundling of property rights generally not allowed Civil law more restrictive than common law For efficiency… In general, efficiency favors more complete property rights People would only choose to unbundle property when that increases its value, so we should allow it? But unbundling might increase transaction costs Increases uncertainty about rights May increase number of parties involved in future transactions Unbundling
9 Unbundling? source:
10 Government can tell you how you can or can’t use your property Regulation The government can take your property “Eminent domain” Next: two ways the government limits property rights
11 Eminent Domain
12 One role of government: provide public goods When public goods are privately provided undersupply Defense, roads and infrastructure, public parks, art, science… To do this, government needs land (which might already belong to someone else) In most countries, government has right of eminent domain Right to seize private property when the owner doesn’t want to sell This type of seizure also called a taking Takings
13 An example from Madison, fall 2015
14 U.S. Constitution, Fifth Amendment: “…nor shall private

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