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The Political Economy of Emerging Property Rights

By Catherine Hafer

Abstract

This manuscript presents a game-theoretic investigation of the conditions for the emergence of institutions of property rights in decentralized political and economic settings. Rather than assuming agents ’preferences over contracts as given, these preferences are shown to be a function of the equilibrium strategies played in the dynamic game of conflict and production in the ”state of nature,” modeled as an asymmetric war of attrition with incomplete information. Although in the steady-state equilibrium of this game no conflict occurs, control of the scarce productive resources is distributed in a way that gives rise to allocational inefficiencies. The model of contractual exchanges in the steady state of the conflict and production game shows the possibility of and gives rise to the conditions for enforcible voluntary contracts between those who control the scarce productive resource and the relatively more efficient ”outsiders” The effects of the endogenously derived conditions on the control and alienability components of ownership rights on the aggregate features of economi

Year: 2000
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