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Property and its Economic Explanation - Essay Example
Most legal systems in the world recognize private property rights or the legal right of an individual to use and exploit resources to the exclusion of others (Krauss 1999). To cover the transactions and disputes which arise over the possession, use, transfer and disposal of property legal systems serve to adjudicate and to enforce property laws…
In the exercise of property rights, potential conflicts can be prevented as in striking a bargain (Muthoo 2000). Indeed, the common law is efficient, but the law generated by the institutions of private property can also be efficient, however with limitations (Friedman 1996). Creating a system of clear, workable property rights facilitates voluntary exchange and ensures that property rights will end up in the hands of those who value them most (Ayres and Talley 1995)
Property is a "bundle of rights." The owner is free to exercise the rights over his or her property. Others, meaning private persons and the government, are forbidden to interfere with the owner's exercise of his or her rights. Traditionally, that bundle of rights includes: 1) control use of the property, 2) benefit from the property, for example rights and rent, 3) transfer or sell the property, and 4) exclude others from the property (Krauss 1999).
The two major justifications of original property, or homesteading, are said to be effort and scarcity. John Locke emphasized effort, or "mixing your labour" with an object, while Benjamin Tucker preferred to look at the purpose of property in answer to solving the scarcity problem. Only when something is relatively scarce do they become property, he said. ...