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Enforcement of Property Rights and Underdevelopment
Author(s) -
DablaNorris Era,
Freeman Scott
Publication year - 2004
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2004.00240.x
Subject(s) - property rights , underdevelopment , economics , enforcement , incentive , property (philosophy) , law and economics , microeconomics , law , political science , economic growth , philosophy , epistemology
The authors formalize the role of legal infrastructure in economic development in a general‐equilibrium model with endogenously determined property rights enforcement. The mutual importance of property rights protection and market production is illustrated by the model's multiplicity of equilibria. In one equilibrium, property rights are enforced, and market activity unhampered. In the other, property rights are not enforced, discouraging economic activity, which leaves the economy without the resources and the incentives to enforce property rights. Even identically endowed economies may therefore find themselves in very different equilibria.