August 5, 2021
Well, not exactly, but when was the last time The Economic Report of the President contained a detailed discussion of the economics of property rights?
The 2021 edition does just that in the context of space exploration. It even contains a graphical depiction of the classic Demsetz (1967) paper.
Here are excepts from the Report’s summary of the economics of property rights:
“North (1991) considers the importance of institutions for shaping and constraining political, economic, and social interactions. Institutions guide economic change toward more growth, decline, or stagnation, depending on the incentive structure they enforce. Tangibly, government institutions determine and enforce property rights as rules governing the economy that shape the competitiveness and efficiency of markets. As rules for property rights are further specified, market participants interact with more certainty about the benefits and costs of potential activities.
The seminal work of Demsetz (1967) outlines the economics behind the evolution of property rights. Property rights bring clarity to people when they are weighing potential decisions. Accordingly, the benefits to setting and further clarifying property rights allow individuals to form more accurate expectations of how the rest of society will interact and respond to their actions. Property rights encourage an individual to undertake investments with the
understanding of which benefits will accrue to that individual.
Establishing and enforcing property rights impose costs on society, as resources are devoted to monitoring and ensuring compliance. An individual’s expectations are based on the understanding that the rest of society will comply with the rights specified, but if other parties are allowed to violate an individual’s property right without recourse, then it will be difficult to set expectations.
Advances in technology that improve monitoring and enforcement will lower the cost of further specifying property rights or adding more “sticks” to the bundle. This decrease in the cost of enforcement, along with the increase in the benefits from setting investment expectations, implies that the optimal level of property rights specification should increase.”
Not bad!
See Alex Salter's recent work for more on property rights in space.