Comment on (Smith on) Demsetz’s

Toward a Theory of Property Rights

Lee FennellUniversity of Chicago Law School

The Institutional GapDemsetz 1967 at 354-55

“Suppose the land iscommunally owned.”

- Pressures toward overhunting = tragedy- Could solve by agreeing to forbear- But negotiating costs are huge!

“If a single person owns land…”

-“broker” for past and future interests-Internalizes many costs and benefits-Lowers transactions costs for others

How do we get to property?

(See, e.g., Krier 1992, 2009)

Internal governance

External governance

Scale Matters

(e.g., Ellickson 1993)

Things Change

• Value of resources– Tastes, technology,

transportation, etc.

• Costs of exclusion• Relative costs of

internal and external governance

Impediments to Adapation• Sticky property

forms• Sticky institutions

(Daniels 2007)• Sticky scales, a.k.a.

the anticommons problem (e.g., Heller 1998)