Well Put My Friend

From page 24 of Alchian and Demsetz's 1973 article "The Property Right Paradigm"-

If private rights can be policed easily, it is practicable to resolve the problem by converting communal rights into private rights. Contrary to some popular notions, it can be seen that private rights can be socially useful precisely because they encourage persons to take account of social costs. The identification of private rights with anti-social behavior is a doctrine as mischievous as it is popular.

The instability inherent in a communal right system will become especially acute when changes in technology or demands make the resource which is owned communally more valuable than it has been. Such changes are likely to bring with them harmful and beneficial effects which can be measured and taken account of only by incurring large transaction costs under the existing property right structure. In such situations, we expect to observe modifications in the structure of rights which allow persons to respond more fully and appropriately to these new costs and benefits. The coming of the fur trade to the New Continent had two consequences. The value of furs to the Indians increased and so did the scale of hunting activities. Before the coming of the fur trade, the Indians could tolerate a social arrangement that allowed free hunting, for the scale of hunting activities must have been too small to seriously deplete the stock of animals. But after the fur trade, it became necessary to economize on the scale of hunting. The control system adopted by the Indians in the Northeastern part of the continent was to substitute private rights in land for free access to hunting lands.

Property rights and how they are defined have very different implications under certain situations. Sometimes social pressure can mitigate the problems of communal living. However, this is not likely to hold up well in times of drastic change or once social pressures fade.

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