Dari-Mattiacci, Guerriero and Huang, ‘Property Versus Contract’

Abstract:
There is a fundamental trade-off between protecting property rights and enhancing reliance on contracts when intermediaries have the opportunity to transfer goods without the owner’s consent. If buyers value the good more than original owners, protection of property misallocates value. Instead, enhancing the buyers’ reliance on contracts causes misallocation if owners have the higher valuation. Our model shows that protection of property rises with the strength of a culture of morality and falls with the quality of the legal system. This is consistent with instrumental variables
estimates based on a novel dataset measuring the wide legal variation existing in 77 jurisdictions.

Giuseppe Dari-Mattiacci, Carmine Guerriero, and Zhenxing Huang, ‘Property Versus Contract‘. Yale Law School. September 29, 2012.

First posted 2012-11-03 11:19:08

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