Open AccessRents in property rights creation and implementation
Author(s) -
Jelena Žarković
Publication year - 2006
Publication title -
economic annals/ekonomski anali
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.148
H-Index - 12
eISSN - 1820-7375
pISSN - 0013-3264
DOI - 10.2298/eka0669089z
Subject(s) - property rights , public property , economic rent , transaction cost , law and economics , politics , state (computer science) , property (philosophy) , economic system , bundle of rights , intangible property , business , institution , property law , government (linguistics) , tangible property , order (exchange) , right to property , economics , market economy , fundamental rights , political science , human rights , microeconomics , law , finance , philosophy , linguistics , algorithm , epistemology , computer science
The institution of property rights is increasingly being recognized as an essential building block of an economically prosperous society. The question that remains unanswered however, is how do we develop effective property rights institutions? The literature dealing with the development of property rights tends to be, in general, overly optimistic since there is a tendency to view the design of property rights institutions as optimizing decisions to economize on transaction costs and to facilitate new economic activities. On the other hand, since property rights define the distribution of wealth and political power in a society changes in property rights structures are likely to be influenced by more than pure efficiency considerations. Therefore, in order to achieve a balanced analysis of the evolution of property rights institutions our article introduces the state in the whole process. Following the propositions of the interest group theory of government we show an important relationship between rent seeking and state involvement in property rights creation. The state with a coercive power to establish and enforce property rights can also use that power, through the process of economic regulation, to redistribute property rights to politically influential interest groups. Herein lies the state failure in property rights creation