Property

"“a property right is a legally enforceable power to exclude others from using a resource.”

- Landes and Posner

Typology

Private, Public, Common

Quotes from Mark Cooper at http://cyberlaw.stanford.edu/system/files/From+Wifi+to+Wikis+and+Open+Source.pdf

Summary of the typology of goods according to the dimensions of rivalry/anti-rivalry, and excludability/inclusiveness:

"In the rivalry dimension, we start at private goods that exhibit high rivalry, which means that use by one subtracts from the use by another. We move to public goods, which exhibit low rivalry, where use by one does not subtract from use by the other. For anti-rivalry goods, we hypothesize the opposite effect, use by one adds to the potential for use by another. In the excludability dimension, we start with private goods, where it is easy to keeping people out. We move to public goods, where excludability is difficulty. For inclusive goods, we hypothesize to the opposite effect – the benefit of pulling people in."

Private Goods

"A private good is rivalrous since “consumption by one person reduces the quantity that can be consumed by another person” and exclusive since “consumers may be denied access.” The central claim for the superiority of private goods is that where resources are rivalrous or subtractable, efficiency requires they be devoted to their highest valued use. Exclusion gives the owner of the resource the incentive to husband the resource, especially where investment is necessary to replenish it. Market allocation solves the subtractability problem by directing resources to their highest value uses. The classic “Tragedy of the Commons” is the case where the failure to grant rights of exclusion leads to either under investment in the resource or overuse.

When rivalry and excludability conditions are absent, the provision of goods in markets becomes problematic, particularly for private firms. Nonrivalry occurs where increased consumption of a good by one person does not decrease the amount available for consumption by others. Here allocation does not promote efficiency, since consumers do not consume anything in the traditional sense and there is no scarcity to allocate. Nonexcludability means the consumers are not economically pre-vented from consumption either because the producer surplus is eaten up by the difficulty of exclusion or compensation cannot be extracted from “free riders.” Exclusion is valueless and there is little incentive to invest." (http://cyberlaw.stanford.edu/system/files/From+Wifi+to+Wikis+and+Open+Source.pdf)

Public Goods

"A public good exhibits nonrivalry in consumption and nonexcludability. When producers cannot exclude individuals from consuming their good, the individuals using the good for free may withhold their support for the good, seeking a free ride. Where the costs of exclusion are high, the cost may outweigh the value of the good. This prevents producers from providing public goods, even when those goods are beneficial to the public." (http://cyberlaw.stanford.edu/system/files/From+Wifi+to+Wikis+and+Open+Source.pdf)

Common Pool Resources

"These resources are non-excludable, but they are rivalrous. The solution to the problems associated with common-pool resources is not necessarily private property, though. “If exclusion costs are comparatively high, common ownership solutions may be preferable.” The possibility of co-existence of different governance regimes is particularly important for common-pool re-sources because many CPRs incorporate characteristics of private and public goods. In some instances, this is known as the “comedy of the commons.” The “comedy of the commons” is the opposite of the “tragedy of the commons” – the notion that users of commonly held property such as forests, fisheries, and most notably air, work together to ensure that overexploitation does not occur." (http://cyberlaw.stanford.edu/system/files/From+Wifi+to+Wikis+and+Open+Source.pdf)

Collaborative Goods

(note from Michel Bauwens: this is what I would call "Common Goods", see the entries on the Common and Common Property)

Mark Cooper:

"Similar to public goods which represent a collective decision to provide an input for communications infrastructure, collaborative production entails a production process in which private appropriation of shared resources is accomplished. However, collaborative production is a continuous direct relationship between producers outside the traditional market place. It is genuine joint production, not the collective supply or management of an input for private appropriation.

Collaborative production goods exhibit traits of anti-rivalry and inclusivity. The key characteristics of collaborative production goods occur where having numerous producers participate in the production of the goods increases its value and where the value of the good goes up as the number of people who use it increases. All three examples, discussed in greater detail later in this paper, wireless mesh networks, open source software and peer-to-peer networks exhibit these characteristics.

Anti-rivalry occurs when the use and/or sharing the production of the good by one person increases the value of the good to others.

Inclusiveness occurs when the value of a good increases as the number of people using and/or producing the good increases.

Eric von Hippel’s work on user driven innovation and free revealing reinforces the distinction between anti-rivalry and inclusiveness. He identifies a Private-collective Good as a good for which individuals volunteer to support the supply of the good to the community of producers. This provides a nuanced difference from a common pool resource in that an independent private action produces the resource for the community. Innovators freely reveal private effort because they can “inherently obtain greater private benefits than free riders.”

In the information economy, just as it is necessary to distinguish between anti-rivalry and inclusiveness, it is also necessary to distinguish between inclusiveness and network effects. Network effects, also known as demand side economies of scale, occur when the costs of producing or the benefits of consuming a good spill over onto those who are producing or consuming the good, beyond the transaction. The benefits of the network effect accrue to members of the network, directly or indirectly. The classic example of a direct network effect is a telephone. The value of the telephone grows as the number of people on the network increases due to the increasing number of reachable people. The classic example of an indirect network effect is software." (http://cyberlaw.stanford.edu/system/files/From+Wifi+to+Wikis+and+Open+Source.pdf)

Access Rights

Summarized by Shiri Pasternak [1]:

"Open Access: “Everybody’s access is nobody’s property” (Bromley 1989).

Limited-User Open Access: Regulated open access – state restrictions limiting users and total yield

State Rights: “It appears that state rights work best when non-market benefits predominate and are dispersed across a population, mechanisms exist for people to express their preferences to the state, no prior claims by individuals or communities exist over the resources, and when the state has the means to enforce rights and the costs of exclusion are high” (81).

e.g. the felling of Alberta’s boreal forest – cost the gov’t a fortune in subsidies

Community rights: “These rights often prohibit persons outside the community from using the resources, and set rules for how the resources should be exploited by members of the community” (82). A multiplicity of forms of community rights are sited, including Sabel grazing, alpine areas of Switzerland, Peru, Ecuador, Bolivia; fisheries; irrigation projects in Asia, Middle East, Africa; forests and woodlands of Japan. Community rights can work well when introduced to manage resources, but where they may be inadequate is when environmental problems are too large and communities too disparate to manage externalities, such as in urban populations.

Private property: “The overriding advantage of private rights is the potential to transfer or alienate a share of resources. This allows resource users, who can generate a higher return from the resource, to acquire a greater share of its yield and thus increase aggregate benefits. The appropriateness of the ‘private property rights solution’, however, depends on the cost of exclusion relative to the benefits of private rights, the institutional setting and equity considerations” (86). (http://www.propertytaskforce.org/node/11)

(Source: Devlin, Rose Ann and R. Quentin Grafton. Environmental Rights and Environmental Wrongs: Property Rights for the Common Good. Cheltenham, UK; Northampton, MA, USA: Edward Elgar, 1998).

Discussion

Theories of Property

Summarized by Shiri Pasternak [2]:

"Stephen Munzer advances some theories on property that can be quantified along several compatible spectrums. The first spectrum is the stretch between commons to anticommons – in between lies state and private property. This correlates with two theories of property more generally – the bundle-of-rights analysis and the rule-governed entitlements analysis.

The bundle-of-rights analysis further breaks down into 8 normative modalities of rights and their correlatives – claim-right, liberty-right, power, and immunity, with their respective correlatives of duty, no-right, liability, and disability [these modalities were developed by Hohfeld [1919] 1978). Then Honoré (1961) “sought to specify the standard ‘incidents’ of ownership common to Western legal systems” (149) by “taking the fundamental legal conceptions and making them more specific by indicating certain actions or events – for instance, to use, to sell, to exclude – in relation to other persons with respect to things” (149). Munzer theorizes the way that the bundle-of-rights also further clarifies our understanding of property: “If someone has all or almost all of the incidents with respect to a given thing, one can speak of ownership. If someone has rather less than the full package of incidents – as with easements or bailments – there is limited property” (149).

It is possible to identify different sorts of property depending on the identity of the right-holder. Thus, an individual person or a corporation has private property, a tribe has communal property, and a government has public or state property” (149).

Different sorts of property are defined by different forms of social organization and relations to the land: each social agent has a different bundle-of-rights. So it’s not the property itself, or the “resource” that dictates the form of property rights, but rather the type of owner.

The rule-governed entitlements analysis is attributed first to Calabresi and Melamed (1972). Munzer writes that “the enduring value of this analysis rests on the light it throws on the interconnections between property, tort, and contract; on its sensitivity to both distributional and efficiency considerations; and on the choice between civil and criminal sanctions for violations of property rights” (150). An entitlement is “an interest that the law does or should protect. The law can do so by using one or more different sorts of rules: ‘property rules,’ ‘liability rules,’ and ‘rules of inalienability’” (149). Here are the differences:

- A property rule: “protects an entitlement if anyone who wishes to remove it from its holder must buy it from the holder in a voluntary transaction at a price agreed upon between the buyer and the holder-seller. A property rule so defined applies only to market-alienability” – gifts can always be offered and accepted.

- A liability rule: “protects an entitlement if and only if anyone who takes or lessens the value of the entitlement must pay a collectively determined… amount to its holder” (150).

- A rule of inalienability: “protects an entitlement if and only if its transfer is not permitted between a willing buyer and a willing seller” (150).

A property rule, in this analysis, involves a collective decision about who gets an initial entitlement but not as to its value, whereas a liability rule involves collective decisions on both who gets an initial entitlement and what it is worth. A rule of inalienability not only protects an entitlement but also limits or regulates it; it involves the most state intervention. Most entitlements are protected by a combination of property rules, liability rules, and, to a lesser extent, rules of inalienability (150). (http://www.propertytaskforce.org/node/12)

(Source: Munzer, Stephen R. “The Commons and the Anticommons in the Law and Theory of Property.” The Blackwell Guide to the Philosophy of Law and Legal Theory. Ed. Martin P. Golding and William A. Edmundson. Blackwell Publishing, 2004).

Appendix: Modes of Property Table - By Paul Cockshott

This typology is proposed by Paul Cockshott.

"Who owns what is the basic question which must be answered by any system of prop- erty law. The atoms of property relations are owners and the things they own; systems of property are like molecules built up of these atoms. The simplest property relationship is ‘A owns B’. But at different times and in different places this right of ownership amounts to different things. To a peasant farmer with property in land and a commodity dealer with property in wheat futures, own- ership has a different practical significance. Let us consider ownership as being made up of four components: the right to use, the right to buy, the right to sell and the right to inherit. In the previous example the peasant is more interested in the right to use and to inherit; to the commodity dealer the rights to buy and sell are everything. (By the right to inherit we include acquisitions by means of marriage.) We can order the component rights as follows: use, sale, purchase, inheri- tance. These rights can be treated as logical predicates. In logic a set of ordered pairs (A,B) for which some predicate holds is termed a relation. For instance, the relation of usufruct is the set of all pairs (A,B) such that A uses B. We thus have four distinct relations that define property rights. These derive from four predicates: the relation Usufruct from the predicate (A uses B), the relation Sale from (A can sell B), Purchase from (A can buy B) and Inheritance from the predicate (A can inherit B).

A given pair of entities, for instance a trader on the wheat futures market (A) and a shipment of wheat (B), may be members of more than one of these sets. In this case the pair (wheat futures trader, wheat shipment) would be included in the relations Sale and Purchase. This is because the Sale relation includes all pairings of potential sellers with all that they can potentially sell, and similarly for Purchase.

A property right between a class of owners P and a class of owned things Q can therefore be characterised by the set of property relations that pairs (p,q) can belong to, there p is an instance of P and q of Q. A property right between classes of entities is therefore a set of between 0 and 4 relations.

Since any predicate is a Boolean relation, we can thus encode property rights in terms of 4 boolean values, giving a total of 16 different forms of property right."

A uses B	A can sell B	A can buy B	A can inherit B	examples
no	no	no	no	(slave, American law)
yes	no	no	no	(collective farm and land)
no	yes	no	no	(hired worker and labour)
yes	yes	no	no	(??)
no	no	yes	no	?
yes	no	yes	no	(consumer and electricity)
no	yes	yes	no	(commodity trader and commodity)
yes	yes	yes	no	(capitalist firm/factory)
no	no	no	yes	??
yes	no	no	yes	(traditional peasant and land)
no	yes	no	yes	??
yes	yes	no	yes	??
no	no	yes	yes	??
yes	no	yes	yes	??
no	yes	yes	yes	??
yes	yes	yes	yes	(full bourgeois right)