Private enforcement and social efficiency |
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Institution: | 1. SALDRU, University of Cape Town, School of Economics Building, Middle Campus, Private Bag X3, Rondebosch, 7701, South Africa;2. Africa Centre for Health and Population Studies, University of KwaZulu-Natal, P. O. Box 198 Mtubatuba, 3935, KwaZulu-Natal, South Africa;3. Princeton University, 367 Wallace Hall, Princeton, NJ 08544, USA;4. Harris School, University of Chicago, 1155 E 60th Street, Chicago, IL 60637, USA |
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Abstract: | This paper makes precise the distributional consequences and social efficiency of private enforcement of property rights. Properties of different values are subject to predation and owners choose between self-defense and private enforcement services. A distributional conflict of interest arises as private protection purchased by rich owners deflects predators on low value properties. The market structure of enforcement and development affect the distribution of property income through relative changes in the security of high and low values property. Moreover, because of the externality enforcers impose on poorer owners, the availability of private enforcement may constrain the policy of a benevolent State. |
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