Lueck 8 Miceli-Property Lato The empirical literature on private property rights is of two types. First, there is a literature that private property. This rather small literature is dominated by studies on natural resources and attempts to measure the dissipation from open access and to compare resource use to that und especially of fisheries where open access regimes have been common(e.g, Agnello and Donnelly 1975, Bottomley 1963). These studies have estimated the deadweight losses from open access use and compared levels of asset use in open access regimes with those of private property and other limited access regimes. Second there is a recent and growing literature on the effects of property rights security on resource use and investment. Much of this literature has focused on the investment effects of differences in legal title to land. In his survey article Besley (1998 )notes that the econometric evidence for positive investment effects of more secure rights in developing countries is quite limited. These studies suffer, however, from data limitations(on oth measures of investment and measures of property rights security)and from potential property rights endogeneity. We expect more investment with better defined rights, but as we discuss in section 4, the choice of property rights regime can itself be influenced by investment levels or other correlated variables. Thus the econometric issue is how to find an instrument for property rights variables to isolate the effect of rights on investment. Still there is some compelling evidence for the importance of property rights in the cases of natural resource use (Bohn and Deacon 2000), American Indian reservation agriculture(Anderson and Lueck 1992), and urban residential land(Miceli et al. 2002) 2.3. Common Property rights In modern social science the term commons common property originated in the analysis of what is now called open access. Yet, in law and custom common property has long meant, in stark contrast to open access, exclusive ownership by a group. Common property regimes have been well documented, especially for natural resource stocks in less developed economies (Bailey 1992, McKay and Acheson 1987, Ostrom 1990), and their details have been studied in many settings(e.g, Acheson 1988, Dahlman 1980, Eggertson 1992, Stevenson 1991). Ma writers on common property have noted the gains from group enforcement of rights to the resource(Ellickson 1993, McKay and Acheson 1987, Ostrom 1990, and Stevenson 1991), and we examine common ownership to take this empirical feature into account Common property is best viewed as an intermediate case between open access and private ownership. Common property may arise out of explicit private contracting(e. g, unitized oil reservoirs, groundwater districts)or out of custom(e.g, common pastures and forests; it may have legal(e. g, riparian water rights)or regulatory(e. g, hunting and fishing regulations) bases that have implicit contractual origins. Contracting to form common property effectively creates a group that has exclusive rights to the resource( eggertsson 1992, Lueck 1994). Acting together There is also a property rights literature that focuses on differences between private and regulated firms(e.g bublic utilities)that we do not discuss here We return to this issue in the context of the choice of title system in section 5.1.1 Indeed Hardins(1968)famous paper incorrectly characterizes the common pastures of English villages as op access resources when the historical record shows clearly that they were common property (e.g, Dahlman 1980, Smith 2000) Further evidence that common property regimes are productive is seen from the disasters that have occurred when they have been dismantled by the state(effectively creating open access )as in the forests of Nepal and Thailand Ostrom 1990)Lueck & Miceli – Property Law 8 The empirical literature on private property rights is of two types.28 First, there is a literature that attempts to measure the dissipation from open access and to compare resource use to that under private property. This rather small literature is dominated by studies on natural resources and especially of fisheries where open access regimes have been common (e.g., Agnello and Donnelly 1975, Bottomley 1963). These studies have estimated the deadweight losses from open access use and compared levels of asset use in open access regimes with those of private property and other limited access regimes. Second, there is a recent and growing literature on the effects of property rights security on resource use and investment. Much of this literature has focused on the investment effects of differences in legal title to land. In his survey article Besley (1998) notes that the econometric evidence for positive investment effects of more secure rights in developing countries is quite limited. These studies suffer, however, from data limitations (on both measures of investment and measures of property rights security) and from potential property rights endogeneity.29 We expect more investment with better defined rights, but as we discuss in section 4, the choice of property rights regime can itself be influenced by investment levels or other correlated variables. Thus the econometric issue is how to find an instrument for property rights variables to isolate the effect of rights on investment. Still there is some compelling evidence for the importance of property rights in the cases of natural resource use (Bohn and Deacon 2000), American Indian reservation agriculture (Anderson and Lueck 1992), and urban residential land (Miceli et al. 2002). 2.3. Common Property Rights In modern social science the term ‘commons’ or ‘common property’ originated in the analysis of what is now called open access. Yet, in law and custom common property has long meant, in stark contrast to open access, exclusive ownership by a group.30 Common property regimes have been well documented, especially for natural resource stocks in less developed economies (Bailey 1992, McKay and Acheson 1987, Ostrom 1990), and their details have been studied in many settings (e.g., Acheson 1988, Dahlman 1980, Eggertson 1992, Stevenson 1991). Many writers on common property have noted the gains from group enforcement of rights to the resource (Ellickson 1993, McKay and Acheson 1987, Ostrom 1990, and Stevenson 1991), and we examine common ownership to take this empirical feature into account.31 Common property is best viewed as an intermediate case between open access and private ownership. Common property may arise out of explicit private contracting (e.g., unitized oil reservoirs, groundwater districts) or out of custom (e.g., common pastures and forests); it may have legal (e.g., riparian water rights) or regulatory (e.g., hunting and fishing regulations) bases that have implicit contractual origins. Contracting to form common property effectively creates a group that has exclusive rights to the resource (Eggertsson 1992, Lueck 1994). Acting together 28 There is also a property rights literature that focuses on differences between private and regulated firms (e.g., public utilities) that we do not discuss here. 29 We return to this issue in the context of the choice of title system in section 5.1.1. 30 Indeed Hardin’s (1968) famous paper incorrectly characterizes the common pastures of English villages as open access resources when the historical record shows clearly that they were common property (e.g., Dahlman 1980, Smith 2000). 31 Further evidence that common property regimes are productive is seen from the disasters that have occurred when they have been dismantled by the state (effectively creating open access) as in the forests of Nepal and Thailand (Ostrom 1990)