Unformatted text preview: Rights Affect Results Rights Affect Results
Fisher Society Story Problem Part I Objectives: Objectives: Explain the difference between types of property rights Explain the results of the Fish Catching problem with the following property rights:
Share and Share alike Public Property Private Property Explain how these rights affect “Teams” Property Rights Property Rights
• A property right is a socially enforced entitlement to select use of an economic good Use Rights
• • • • • Alienability Rights
• Right to use Right to prevent others from using Right to alter Right to sell or reassign above rights (use rights fall in value if alienability right is unbundled from property rights; need for secondhand markets) Right/Rule #1 Right/Rule #1 Share and Share alike The Fisher’s society has communal property rights All fisher’s share the average product caught in the boat Results characteristic for socialist firms, labor unions and professions like electricians, musicians, doctors, lawyers and other professional partnerships (membership granted by certifying boards) Right/Rule #2 Right/Rule #2 Public Property Everyone owns the boat Those in the boat can’t prevent others from getting in the boat Those in boat share the catch equally Right/Rule #3 Right/Rule #3 Private Property Rights (Capitalism) What if the fishing catch is not guaranteed?
Randomness Shirking Finder of the boat is now the owner of the boat Owner bears risk Maximum private and maximum social gain Owner hires fishers or Fishers rent the boat Questions Questions 3–14 The guide at the Washington Monument tells your 10 3–14 year old nephew, “Enjoy the monument. As a citizen, you are one of its owners.” Your nephew asks if this is true. What do you say? you Questions Questions 3–15. Locust Hill Golf Club is a private country club. It 3–15. charges an initiation fee of $23,000. When members quit the club, they receive no refund on their initiation fees. They simply lose their membership. Salt Lake Country Club is also a private golf course. At this club, members join by buying a membership certificate from a member who is leaving the club. The price of the membership is determined by supply and demand. Suppose that both clubs are considering installing a watering system. In each case, the watering system is expected to enhance the quality of the golf course significantly. To finance these systems, members would pay a special assessment of $2,000 per year for the next 3 years. The proposals will be voted on by the memberships. Do you think that the membership is more likely to vote in favor of the proposal at Locust Hill or for the one at Salt Lake Country Club? Explain. Club? 3–13. In certain professional sports, team owners "own" the 3–13. players. Owners can sell or trade players to another team. However, players are not free to negotiate with other team owners on their own behalf. The team owners initially obtain the rights to players through an annual draft that is used to allocate new players among the teams in the league. They can also obtain the rights to players by purchasing them from another team. Players do not like this process and often argue that they should be free to negotiate with all teams in the sporting league. In this case, they would be free to play for the team that offers the most desirable contract. Owners argue that this change in rights would have a negative effect on the distribution of talent across teams. In particular, they argue that all the good players would end up on rich, media-center teams such as New York or Los Angeles (because these teams could afford to pay higher salaries). The inequity of players across teams would make the sport less interesting to fans and thus destroy the league. Do you think the owners' argument is correct? Explain. correct? ...
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- Spring '08
- golf course, Washington Monument, Salt Lake Country Club