The Importance of Well-Defined Property Rights

Resources are scarce. This inevitably means conflicts will arise.  Here is one such example following a snowstorm in Boston.

In this case, the property right is well-defined.  The “space-saver” has no right to the space: “Space savers are prohibited in the South End [of Boston].”  He has no right to prohibit use of the space to other people; in fact, the other person has the right to sue the space.  Should the space-saver make good on his threat, he would rightfully be punished.

However, if there were no property rights, or if they were ill-defined, then the conflict could and likely would persist if not escalate.  Would the space-saver be in the right to defend the space?  Or would he be in the wrong?  Lack of any kind of guidance on the issue would prevent the creation of more parking spaces (which Lord knows Boston needs).

There is another element to this story I’ve not explored.  This whole time, I’ve assumed that the legislation governing the allocation of parking space property rights aligns with the law of parking spaces (that is, the customs governing their use).  If this is not the case, however, we see how legislation can actually make a conflict worse.  Let’s, for the sake of argument, assume this situation now.  Let’s say the space-saver is acting according to the law, which is whoever places something to save a space prior to a snowstorm can park in that space after/during (I know this is the unspoken, but very real, rule in North Boston). Therefore, the space-saver was acting within his expectations of a right.  In the eyes of the law (again, not legislation) he was in the right!*  The legislation, then, is attempting to override the law, which can create more conflict, rather than eliminate it!  Legislation is not the only way to define property rights.

One final parting thought: This conflict between the space-saver and the driver who parked there may be indicative that the current property right regime is inefficient for the current situation.  We may have institutional failure.  However, one should not try to read too much into the situation from this one conflict.  Institutions can and should be difficult to change, and there will always be scofflaws.  No system will eliminate conflicts, but when conflicts arise it may be an indication of the need for institutional change.  But the presence of conflict is not sufficient reason alone to change.

*His behavior is over the top, to be sure

2 thoughts on “The Importance of Well-Defined Property Rights

  1. Resources are scarce. And, if property rights are ill defined or can be revoked at will by government, then those who feel they own the property will do what they have to to protect such property.

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