1 / 30

The time-honored and fundamental question:

The time-honored and fundamental question:. Why should there be any property rights in things? In what respects does the protection of property right promote social welfare?. What is going to happen without property right?.

nathan
Download Presentation

The time-honored and fundamental question:

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The time-honored and fundamental question: Why should there be any property rights in things? In what respects does the protection of property right promote social welfare?

  2. What is going to happen without property right? • Coase(1962): Nothing, in the perspective of social efficiency, if there are transaction costs • Ex: cow and railroad, factory and nearby residents, females in the males dorm

  3. The (Coase)Therom • Posner :if transactions are costless, the initial assignment of a property right will not affect the ultimate use of the property. • Levitt: the initial allocation of legal entitlements does not matter from an efficiency perspective as long as they can be exchanged and transaction costs are low enough. Becker: but it does affect distribution! income effect: efficiency will be changed in a GE view.

  4. When do property rights matter? • No transaction cost→ property right does not matter • Property right matter →transaction cost • In general, we assume that we have higher probability to find the situation where Coase thm does not apply if there are transaction costs. • IF Coase Thm fails to explain the real world almost everywhere, that means PR is important...

  5. 當有交易成本時財產權的歸屬會影響到資源的有效運用當有交易成本時財產權的歸屬會影響到資源的有效運用 • 因此 選擇財產權(or legal rules) 的標準： • Minimize the effect of transaction cost • Ex • 若居民有空氣權 工廠找居民 漫天要價 • 若工廠有空氣權 居民找工廠 抗爭黑道

  6. Transaction cost comes from (1)Number of participants: Olson and Dixit(J of Public Economics, 2000 pp309-335) In a public good game, (2)Cost of bargaining and enforcement (3)Identifying parties to bargain是誰排氣？ (4)Strategic behavior: • Bilateral monopoly ex 只有夫妻兩人 • Asymmetric info • Hold up ex共有土地一人一票

  7. (4)Information Hoffman and Spitzer J Law and Economics (1982) 1st experiment: common info 2nd experiment:private info (only know own payoff • 1st prediction: gets PO • 2nd prediction: property right owner gets the surplus

  8. Result: • prediction 1 prediction 2 • 1st exp 23/24 7/24 • 2nd exp 19/24 6/24 (5)Culture: AER 2001 May p73-78 • The splitting one dollar, take or leave game.

  9. Why Property Right? • A bundle of right, what a person may or may not do about his “stuff”…ex the 700 million T-rex 3 Justification: Shavell and Kaplow(2002, Handbook of public economics, vol 3.) (1)provide incentive to work and invest (2)reducing the cost of fighting for things improve welfare if people are risk averse Ex the “bad” NE in Hobbs’(1651) example (3) It facilitates exchange, by reducing the transaction cots

  10. Another Way to Answer the Question: • DeSoto: the Myth of Capital He asks: why free market does not work in Africa and S. America? His answer: (1)they don’t have reasonable property right system, ex Farmer in Tazania (2)They are not trying to put the “illegal“ property into the legal system..??? Ex: Egypt and Peru VS US Homestead act(186?)

  11. （１）確定資產中的潛能 （２）把分散的資訊融合一起： 要有一個統一登記保存解釋的司法財政制度 （３）誘因 （４）資產互換 （５）建立人際關係：有互信,印象好再向你買另一樣東西　　Facilitate Social Trust Ex: 買房子

  12. Hart and Williamson • 始料未及的狀況一定會發生(the concept of incomplete contract：you just can not specify everything in the contract) 　可能大好也可能大壞 under invest So property right is a residual claims or returns：　由有財產權者來承擔此一風險 Socially optimal if principal agent model holds

  13. What if no property right? • Tragedy of the commons Ex: Demsetz (AER 1967): toward a theory of property right: fur price and the set up of property right of the labrador peninsula by the indians • Fighting over property: Ex: Umbeck(1981): CA’s Gold-rush in 1848

  14. Notice: Today property right are often conflated with market system: this is a mistake. So the argument that market is better than planning is different from that justifying the existence of property right per se. Ex: state own company can pay by incentives, too. But usually , we believe that market system has larger demand for and hence are more likely to protect property right.

  15. 即使有交易成本, 有了財產權也不一定就會使資源分配更有效率！ • Ex: intellectual property right: • 可能研發成本C, monopoly rent A, social CS =B and B>C>A • 即使 A>C still we have patent race • 故實證是很重要的！

  16. The Empirical Question Motivated from the previous claims: (1)Incentives to work: Lazear (AER 2000, Dec) (2)Incentive to invest (Besley 1995) (3)Reduce the cost of fighting?(沒見過) (Democracy fight less war?) (4)Facilitate exchange: cause the increase of trade volume and economic growth ?( Alesina, Barro… )

  17. Problem: Hard to isolate and measure the impact of a particular property right in the modern world. Ex:不動產證券化條例：outcome 是什麼？ 股價?房價?（measurement）如果上漲是因為它還是其他原因？（SARS?抓到海珊?） (omitted variable)?是他導致經濟成長?還是反過來?(simutaneous problem) 資料很不乾淨：太多干擾 兩個方法：

  18. （１）用力洗乾淨　make it highly math and econometric complicated • （２）找乾淨的資料 ：去那找? • What about a world that just enter the modern economy from the tribe ones? outcome: agriculture, property right: land Ex Taiwan 1949 • Besley JPE 1995 “Property rights and incentives: theory and evidence form Ghana.”

  19. Theory: • Max W(Kt,Rt+1)=V(Kt, Rt+1)- C(Kt, Rt+1) • {Kt} + + + - • V: revenue, C: cost, K: invest, Rt+1: level of property right at t+1(exogenous) FOC: W1(Kt,Rt+1)=0 total differential : dKt,/dRt+1=-W12/W11 >0 iff W12<0 下一期的財產權好：這一期就會多投資

  20. Three Cases: • (1) the security argument: assuming there is a probability that the land is expropriated, and the higher the Rt+1, the lower the probability of being robbed by the govn’t, so investment increase(ex: 1950s Taiwan) • (2)a Collateral-based view: a land is easier to collateralized (higher Rt+1),interest rate is low, since farmer equate the marginal return to invest on land to r, so investment ….

  21. (3)A gain from trade perspective: assuming higher Rt+1 reduce the transaction cost, if an outside offer (rent or buy ) occur (stochastic), the trade gain will be larger if you invest more on the land. Data: Ghana: from traditional claims of (land) rights to modern ones. We guess: Property right→investment But investment also secure future property right. (p905) :此樹是我栽,此地即是我財產 Endogeneity problem →need to find IVs

  22. Instrumental variable approach • Y=BX+μ • B(ols)=cov(y, x)/cov(x,x) =B+cov(x, μ)/cov(x,x) =0 if x, μuncorrelated unbiased (OLS) ≠0 if x, μcorrelated biased Three sources: omitted variable, simutaneous problem, measurement error on X Find IV z, such as(1) cov(z, μ)=0 (2)cov(z,x)≠0

  23. Steps • (1) regress X on Z find X(fitted value)=Z(Z’Z)^(-1)Z’X • (2) regress y on X(fitted value) B(IV)=cov(z, y)/cov(z,x)=B+cov(z,u)/cov(z,x) =B unbiased 用Z 做IV找出Y被X所導致的變異中,好的部分 要分好壞要知道他們從哪裡來 Good IV comes from: Natural experiment: election, birth cohort Random assignment: lottery Has to be very careful

  24. Also notice that there is no necessary link between property right and investment b/c: the community leader might be doing a good job. Social planner. DATA: six property right: sell, rent, gift, mortgage, pledge(擔保),bequest(遺贈) + need approve from lineage?(0,1) Variable: right with approval without approval So among those 6 rights, if a land has 3 rights without approval, 2 with approval, we code them as (3,2)

  25. i: farmer, j :field, a farmer may have several fields. • Kijt=βRijt+1+εijt Rijt+1=λKijt+αRijt+ηijt Simutaneous system, use Rijt to IV Rijt+1 Model says. When deciding kt, Rt is fixed, we guess Rt+1 and decide kt But our data only know Rt+1 and kt, not Rt (可能農民無法記得這六個財產權還有改善的設施是在什麼時候弄的)

  26. Four IV used (Rt) • Transfer deed • Ever litigated • How the field was acquired • How many years the field has been owned • Good Iv has to correlated w/p.r. and uncorrelated with e, or w/investment, except through p.r. • So 12 is good , but 3 4 not.

  27. Two places: Wassa and Anloga • Wassa: planning tree is the only investment, • Table 3, 4(with hh dummies) • OLS IV • w/no hh 0.03 0.12 • w/hh 0.07 0.11

  28. Anloga: • Table 5, Property rights 和drainage, land excavation, mulching, making shallot bed 有關 • But are uncorrelated w/ manuring, irrigation , why? • Table 6 first stage result of rights regression, • Where is the second stage result? • Bottom of page 927

  29. The problem of this paper • Model: all very intuitive: why use math to say something we havd already known and can be said by economic intuition? • Empirical: • IV Is very week, signs are not right • OLS and IV does not fit model’s prediction • B(ols) should be larger than IV’s result

  30. Then why it is in JPE? • Even did not report Anloga’s IV result! • Estimated result is very small, only 3-7 percent? • Maybe it is just that the community leader is doing a good job, and this 3% is just his salary? • Can’t say much about pr’s effect

More Related