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How should we model property? Thinking with my critics


Inspired by comments made by Allen (2017), Lueck (2017), Ménard (2017) and Smith (2017), this response clarifies and deepens the analysis in Arruñada (2017a). Its main argument is that to deal with the complexity of property we must abstract secondary elements, such as the physical dimensions of some types of assets, and focus on the interaction between transactions. This sequential-exchange framework captures the main problem of property in the current environment of impersonal markets. It also provides criteria to compare private and public ordering, as well as to organize public solutions that enable new forms of private ordering. The analysis applies the lessons in Coase (1960) to property by not only comparing realities but also maintaining his separate definition of property rights and transaction costs. However, it replaces his contractual, single-exchange, framework for one in which contracts interact, causing exchange externalities.

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Thanks to Douglas W. Allen, Mircea Epure, Dean Lueck, Claude Ménard, Nicolás Nogueroles, Cándido Paz-Ares, Henry E. Smith and Giorgio Zanarone for their comments. This work received support from the Spanish Government through grant ECO2014-57131-R.

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Journal of Institutional Economics
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