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Property Rights - Property Rights Ariel Singerman...

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Property Rights Ariel Singerman November 16, 2010
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Assignment of rights Property rights are a set of valid claims to a good or resource that consent its use or transfer of ownership through sale Complete property rights are a requirement for a market to be competitive Without well defined property rights, markets cannot be relied upon to efficiently allocate goods (or bads) and services Establishing enforceable property rights makes goods excludable and the price mechanism work Who should own the property rights to the environment ? the polluter or the victim of pollution? Polluter pays principle is often the one used in public policy in most countries More controversial: Without victim pollution would not be a problem
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CoaseTheorem Under some assumptions for efficiency it makes no difference whether polluter or victim has the property rights If trade is allowed efficiency will prevail irrespective of how property rights are initially allocated i.e.: rights will end up in the “right” hands (of those agents that value them the most) Of course it does make a lot of difference for the polluter or the victim who has the rights -they can benefit from having them We will consider 2 cases when studying the Coasetheorem 1.
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