THE GLORIOUS PROPERTY OUTLINE
SPRING 2008—PROFESSOR LYNN BAKER
I. Basics of property
A. Property law is the establishment and transfer of entitlements
B. Two categories of property: real property and personal property
C. What goes along with “owning” property?
1. Rights: physically possess, use, transfer, destroy, exclude others, convert to some other use
2. Responsibilities: tort liability; tax liability; follow limitations such as servitudes, zoning laws, etc.
D. Underlying property theories
1. Posner—law and economics
a. Best system of property rights is characterized by…
i. Universality—everything can be owned and is owned by someone
ii. Exclusivity—rights to property are vested in single owners
iii. Transferability—property rights can be moved as easily as possible
b. Why is this a superior system?
i. Individual owners will take better care of property and have an incentive to invest in improvements
ii. Property ends up with the higher-value user
iii. Avoid tragedy of the commons
c. Problems with this theory
i. In the real world, transaction costs get in the way of ideal transferability
ii. Valuation and ability to pay do not always correlate
d. Overall, private property is preferable to public ownership
2. Hardin—Tragedy of the Commons
a. Assumptions inherent in this theory
i. Scarcity of resources
ii. Human nature is to act in rational self-interest
b. With communally-owned property, the benefit is so spread out that no individual has an incentive to do things that are beneficial to society as a whole
c. Arises when privately-owned personal property must use the resources on communally-owned land
d. The grazing cows analogy
e. How do we counteract the tragedy of the commons?
i. Extensive governmental regulation
ii. Privatize the communal land
iii. Communalize the personal property
iv. Change human nature (like that’s going to happen!)
3. Demsetz—externalities
a. Externalities—effects on others that result from
with great sentimental value
d. Utilitarian (Hume/Bentham)—everyone has an interest in promoting his/her own happiness, and private property promotes happiness and welfare
e. Rules of Efficiency
i. Kaldor-Hicks: we take any action where aggregate benefits exceed aggregate costs
ii. Pareto: focus on whether a given action makes someone better off and makes anyone worse off—do not engage in actions that make even one person worse off
6. Calabresi/Melamed entitlement framework
a. Ask two questions
i. Who gets the entitlement?
ii. What is the value of the entitlement?
b. Three categories of entitlement rules
i. Property rules
-Enforced by injunctions
-Society sets the initial entitlement
-Any subsequent transfer of the entitlement is the decision of the owner
