We identify a key trade-off between protecting property rights and enhancing reliance on contracts. For instance, when a dishonest intermediary transfers a good to an innocent buyer without the owner’s consent, should the buyer or the owner retain the good? We show that the optimal rule maximizes the agents’ valuation of the good rather than their incentives to protect property and inquire about title. Furthermore, enhancing reliance on contracts is more appealing in countries where fewer intermediaries are honest and law enforcement ismore efficient. This is consistent with novel comparative-law data on the acquisition of ownership over movables.

The Property-Contract Balance / Guerriero, Carmine. - In: JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS. - ISSN 0932-4569. - STAMPA. - 172:(2016), pp. 40-64. [10.1628/093245616X14500948553956]

The Property-Contract Balance.

GUERRIERO, CARMINE
2016

Abstract

We identify a key trade-off between protecting property rights and enhancing reliance on contracts. For instance, when a dishonest intermediary transfers a good to an innocent buyer without the owner’s consent, should the buyer or the owner retain the good? We show that the optimal rule maximizes the agents’ valuation of the good rather than their incentives to protect property and inquire about title. Furthermore, enhancing reliance on contracts is more appealing in countries where fewer intermediaries are honest and law enforcement ismore efficient. This is consistent with novel comparative-law data on the acquisition of ownership over movables.
2016
The Property-Contract Balance / Guerriero, Carmine. - In: JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS. - ISSN 0932-4569. - STAMPA. - 172:(2016), pp. 40-64. [10.1628/093245616X14500948553956]
Guerriero, Carmine
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/597944
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