Both conventional price theory and standard economic accounts of tort and contract law assume fixed property rights. In fact, however, property regimes are not static but change over time. Given the assumption of fixed property that otherwise prevails in economic literature, explaining the evolution of property rights is one of the great challenges for the economic analysis of law.
The point of departure for virtually all efforts to explain changes in property rights is Harold Demsetz’s path‐breaking article, “Toward a Theory of Property Rights.” The article is still widely cited and reproduced, especially in first‐year property courses in law schools. Yet for all its deserved fame, the article contains at best a sketch of a theory and offers only anecdotal evidence by way of support. On April 21–22, 2001, the conference The Evolution of Property Rights was held at Northwestern University School of Law. The purpose of the conference was to reexamine the Demsetz thesis, consider possible alternatives or elaborations to it, and develop further empirical evidence either to confirm or disconfirm it. The articles in this volume, including an afterword by Demsetz, are the outgrowth of the papers presented at that conference.
The Demsetz thesis can be seen as an anticipation of the idea that the common law evolves toward efficient rules. Demsetz hypothesized that property rights emerge when the social benefits of establishing such rights exceed their social costs. In effect, he suggested that legal rules regarding resources change over time along a path that produces net benefits to the relevant community.
Thomas W. Merrill,
The Demsetz Thesis and the Evolution of Property Rights,
J. Legal Stud.
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