gv_11467finlpapr

gv_11467finlpapr - The Private Property-Common Property...

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Unformatted text preview: The Private Property-Common Property Dichotomy Is There a Middle Ground in the Property Rights Theory? Georgeta Vidican May 13, 2005 11.467 Property Rights in Transition Spring 2005 Final Paper 1 Introduction Property rights are fundamental to market theory. The neo-classical economic theory is based on an institutional regime of private property in which all goods and services are privately (individually) utilized or consumed. Within this theoretical framework, the only other option allowed for is the extreme sot type of state-controlled ownership of assets. More recently this dichotomous categorization of property rights regimes, proved to be very limited in accounting for the variety of ownership arrangements, formal as well as informal, existing especially in developing countries. Furthermore, empirical evidence suggests that policy prescriptions based solely on the neo- classical economic theory were not able to attain the expected outcomes for higher growth and improved welfare. While the importance of collective or communal endeavors were long ago acknowledged, only few attempts have been made to extend the formal theoretical framework to include these middle ground ownership arrangements (mainly Buchanan 1965; Ostrom 1990). However, to this date, none of the current theories are comprehensive enough to explain the variety of property regimes endogenously formed in developing countries as well as their dynamics. One of the most controversial debates in the current literature on property rights, especially in the context of transition economies, has to do with the transfer of ownership from state to private hands and the intricacies of institutional change implied by this transfer. Along with the privatization of public utilities, land reform was one of the most contested and sensitive policies after the fall of Berlin wall. The wide range of approaches to land privatization adopted by the transitional economies attests to the complexity of this endeavor and the narrowness of the dichotomous 2 theoretical perspective. Moreover, while other countries managed to smoothly transition in property rights regimes, others are still debating whether land should be privatized to individual or cooperative structures and what organizational form is most likely to generate a higher value added to production as well as improved welfare for the population. Discussions of the underling characteristics and benefits of cooperative forms of ownership are overshadowed by the widespread understanding that these types of property rights regimes are necessary associated with the failed Soviet experience. Stewart (1996) argues that “the failure of communism [is] being used to deny the critical importance of groups and collective action in development.” In this paper I propose a theoretical overview of the existing models of organization of property rights (private versus common property) as well as the main debates on intermediate forms of ownership based on cooperation/association. These alternatives to the private/common forms of ownership based on cooperation/association....
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This note was uploaded on 11/10/2011 for the course ARCH 4.101 taught by Professor Williamhubbardassn during the Spring '03 term at MIT.

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gv_11467finlpapr - The Private Property-Common Property...

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