Property Rights
Property rights are theoretical constructs that determine how a resource is used and owned. Resources can be owned and used by governments, collective bodies, or individuals. There are four broad components of property rights. They are the right to:
- use the good,
- earn income from the good,
- transfer the good to others, and
- enforce the property rights.
Property usually refers to ownership and control over a good or resource. Ownership means that the entity or individual has the rights to the proceeds of the output that the property generates.
Types of Property Rights
Property rights are determined based on the level of transaction costs associated with the rights. The transaction costs are the costs of defining, monitoring, and enforcing the property rights. The four types of property rights are:
- Open access property: this type of property is not owned by anyone. For this reason, no one can exclude anyone else from using it. It is possible though that one's person use of the property will reduce the quantity available to others. Open access property is not managed by anyone and access to it is not controlled. Examples include the atmosphere or ocean fisheries.
- State property: also known as public property, this type of property is owned by all, but its access and use is controlled by the state. An example would be a national park .
- Common property: also called collective property, this type of property is owned by a group of individuals. The joint owners control the access, use, and exclusion of the property.
- Private property: use of this type of property is exclude. Private property use and access is managed and controlled by a private owner or a legal group of owners.
Defending Property Rights
For any good, property rights must be monitored and the possession of the rights must be enforced. The rights are put in place to control, monitor, and exclude the use of the stated property. Property rights protect not only land, but also goods, services, and finances associated with the land itself. Corruption impacts the private and public sectors because it increases the cost of doing business and distorts markets.
The concept of property rights are closely related to the law in terms of defending the rights. There is a difference between an economist's view of property rights and the view of the law, but both work together to reach the final goal of securing and maintaining the rights. For example, suppose a thief steals a good. The thief has economic property right to the good because it is in his possession - he has the ability to use the good. However, the thief does not have legal property right to use the good - by law he is not permitted to have access to or use of the good. Economics sets the property rights and the law is used to enforce the rights. Each of the four types of property rights differ in the amount of money and defense needed to ensure that the rights are upheld. The greater the restrictions that property rights place, the more likely that defense of the rights will be needed.
Yosemite National Park
This picture is a view at Yosemite National Park. National parks in the United States are state property. Access and use of the park is controlled and enforced by the state.