I. Assumption: Conflicts of interests can only be resolved, not eliminated, by competition
II. Definition: A system of property rights is a method of assigning to particular individuals the authority to select, for specific goods, any use from a non-prohibited class of uses, which involves some concept of enforcement
Economists' view
1. Various property rights types are omitted
2. Utility maximization subject to aggregate wealth constraints, not private type of wealth constraint => in reality, private property not about utility maximization, e.g. exchange of lewd pictures
3. Legal enforcement only does not explain, some social opprobrium/norms involved => yet, the constraint is actually only the choice over physical attributes, not the value-in-exchange effects nor the emotion effects that the counterparts may consider as improper
III. Partitioning of property rights
- Selective partitioning, not cross-sectional division, e.g. lease
- Does the initial partitioning of rights matter? Negative in Coasian world (no costs of negotiation). Yet transaction costs should lead to evolution of certain types of larger types of property rights.
IV. Sharing property rights
- Public vs. private ownership: same objective, but different rewards-costs schedule => roots of difference: the inability of public owner to sell his share of ownership, not the profit incentive
- Ownership of public property is compulsory; involves dilution (one joins and shares ownership with payment)
V. Transferability/sale-ability of ownership leads to:
1. Concentration of rewards and costs more directly on each person responsible for them => varying preference for level of dependency
2. Comparative advantage effects of specialized applications of (a) knowledge in control (b) of risk bearing
=> risk bearing: separation of ownership and control <=> separation of risk bearing (passive) and management (active): some forms of "betting"
Finding: Under public ownership the costs of any decision are less fully thrust upon the selector than under private property.