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Property as sequential exchange: definition and language issues

Abstract
Abstract

Benito Arrunãda's paper on the transaction cost problems involved with land, provides an excellent explanation of land legal institutions. This explanation revolves around the fact that land exists through time, and that various exchanges made with respect to land at one time affect exchanges in other times. Arrunãda refers to this as ‘sequential exchange’, and he argues that sequential exchange provides the explanation for state involvement in titling and the default nature of in rem rights. Unfortunately, Arrunãda frames his argument with an inappropriate notion of transaction costs. This creates a confusing language, and a faulty interpretation of Coasean logic. Reframing the first sections of his paper using the ‘property rights’ definition of transaction costs brings brevity and clarity to the ultimate point he is trying to make.

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*Email: allen@sfu.ca
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Thanks to Benito Arrunãda and Yoram Barzel for their comments.

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Alchian A. (1965), ‘Some economics of property rights’, Il Politico, 30 (4): 816–29.
Allen D. W. (1991), ‘What are transaction costs?’ Research in Law and Economics, 14: 118.
Allen D. W. (2000), ‘Transaction costs’, in Bouckaert B. and de Geest G. (eds), Encyclopedia of Law and Economics, Cheltenham: Edward Elgar Press, pp. 893926.
Allen D. W. (2015a), ‘The Coase theorem: coherent, logical, and not disproved’, Journal of Institutional Economics, 11 (2): 379–90.
Allen D. W. (2015b), ‘On Hodgson on property rights’, Journal of Institutional Economics, 11 (4): 711–17.
Arrunãda B. (2017), ‘Property as sequential exchange: the forgotten limits of private contract’, Journal of Institutional Economics, published online. DOI: 10.1017/S1744137416000473.
Barzel Yoram (1989, 1997 editions), Economic Analysis of Property Rights (Cambridge: Cambridge University Press.
Barzel Y. (2015), ‘What are “property rights”, and why do they matter? A comment on izeHodgson's article’, Journal of Institutional Economics, 11 (4): 719–23.
Coase R. (1960), ‘The problem of social cost’, Journal of Law and Economics, 3: 144.
Coase R. (1988), The Firm, the Market, and the Law (Chicago: University of Chicago Press).
Cole D. (2015), ‘“Economic property rights” as “nonsense upon stilts”: a comment on Hodgson’, Journal of Institutional Economics, 11 (4): 725–30.
Hodgson G. (2015a), ‘Much of the “economics of property rights” devalues property and legal rights’, Journal of Institutional Economics, 11 (4): 683709.
Hodgson G. (2015b), ‘What Humpty Dumpty might have said about property rights – and the need to put them back together again: a response to critics’, Journal of Institutional Economics, 11 (4): 731–47.
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Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
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