PROPERTY RIGHTS AND PROPERTY LAW orthcoming in Polinsky Shavell eds, Handbook of Law and Economics DEAN LUECK AND THOMAS J MICELIE Abstract. This chapter examines the economics of property rights and property law. It shows how the economics of property rights can be used to understand fundamental features of property law and related extra-legal institutions. The chapter examines both the rationale for legal doctrine, and the effects of legal doctrine regarding the exercise, enforcement, and transfer of rights. It also examines various property rights regimes including open access, private ownership, common property, and state property. The guiding questions are: How are property rights established? What explains the variation in the types of property rights? What governs the we argue that property rights and property law can be best understood as a system of societal use and transfer of rights? And, how are property rights enforced? In answering these questio rules designed to maximize social wealth. They do this by creating incentives for people to maintain and invest in assets, which leads to specialization and trade DRAFT OF AUGUST 17, 2004: DO NOT CITE OR QUOTE WITHOUT PERMISSION KEYWORDS: PROPERTY RIGHTS. OWNERSHIP TRANSACTION COSTS. EXTERNALITY JLE CODES: D23. D62K11 K23 s Lueck: University of Arizona. Miceli: University of Connecticut. We are grateful for the comments of Doug Allen, Tom Hazlett, Eric Rasmussen, lan Wills, as well as participants in the Law and Economics Handbook Conference at Stanford Law School, the European School for New Institutional Economics, and a workshop at the University of Michigan. Lueck was supported by the Cardon Endowment for Agricultural and Resource Economics* Lueck: University of Arizona. Miceli: University of Connecticut. We are grateful for the comments of Doug Allen, Tom Hazlett, Eric Rasmussen, Ian Wills, as well as participants in the Law and Economics Handbook Conference at Stanford Law School, the European School for New Institutional Economics, and a workshop at the University of Michigan. Lueck was supported by the Cardon Endowment for Agricultural and Resource Economics. PROPERTY RIGHTS AND PROPERTY LAW [Forthcoming in Polinsky & Shavell eds., Handbook of Law and Economics] DEAN LUECK AND THOMAS J. MICELI* Abstract. This chapter examines the economics of property rights and property law. It shows how the economics of property rights can be used to understand fundamental features of property law and related extra-legal institutions. The chapter examines both the rationale for legal doctrine, and the effects of legal doctrine regarding the exercise, enforcement, and transfer of rights. It also examines various property rights regimes including open access, private ownership, common property, and state property. The guiding questions are: How are property rights established? What explains the variation in the types of property rights? What governs the use and transfer of rights? And, how are property rights enforced? In answering these questions we argue that property rights and property law can be best understood as a system of societal rules designed to maximize social wealth. They do this by creating incentives for people to maintain and invest in assets, which leads to specialization and trade. DRAFT OF AUGUST 17, 2004: DO NOT CITE OR QUOTE WITHOUT PERMISSION. KEYWORDS: PROPERTY RIGHTS, OWNERSHIP, TRANSACTION COSTS, EXTERNALITY. JLE CODES: D23, D62, K11, K23