Property rights are constructs in economics for determining how a resource or economic good is used and owned, which have developed over ancient and modern history, from Abrahamic law to Article 17 of the Universal Declaration of Human Rights. Resources can be owned by (and hence be the property of) individuals, associations, collectives, or governments. Property rights can be viewed as an attribute of an economic good. This attribute has three broad components, and is often referred to as a bundle of rights in the United States:
usus: the right to use the good fructus: the right to earn income from the good abusus: the right to transfer the good to others, alter it, abandon it, or destroy it (the right to ownership cessation) Economists such as Adam Smith stress that the expectation of profit from "improving one's stock of capital" rests on the concept of private property rights.
Conceptualizing property in economics vs. law The fields of economics and law do not have a general consensus on conceptions of property rights. Various property types are used in law but the terminology can be seen in economic reports. Sometimes in economics, property types are simply described as private or public/common in reference to private goods (excludable and rivalrous goods like a phone), as well as public goods (non-excludable and non-rivalrous goods, like air), respectively. Below is a list of the several property types defined and their relation to the economic concepts of excludability (the ability to limit the consumption of the good) and rivalry (a person's consumption of the good reduces the ability of another to consume it).
Types of property regimes Property rights can be categorized with excludability and rivalry. Excludability describes the characteristic regarding whether a good can be withheld from certain consumers. In terms of the same good, rivalry describes its accessibility to competing consumers. The combination of excludability and rivalry as parameters is reflected through various types of property rights. Open-access property is owned by nobody (res nullius). It is non-excludable, as excluding people is either impossible or prohibitively costly, and can be rivalrous or non-rivalrous. Open-access property is not managed by anyone, and access to it is not controlled. This is also known as a common property resource, impure public good or sometimes erroneously as a common pool resource. A common pool resource however is often managed the group of people that have access to that resource . Examples of this can be air, water, sights, and sounds. Tragedy of the commons refers to this title. An example would be unregulated forests as there's limited resources available and therefore rivalrous, but anyone may access these resources. If non-rivalrous, it would be a public good (cannot be rivalrous, no matter how much it is used, for example, the ocean (outside of territorial borders)). Open-access property may exist because ownership has never been established, granted, by laws within a particular country, or because no effective controls are in place, or feasible, i.e., the cost of exclusivity outweighs the benefits. Public property, also known as state property, is excludable and can be rivalrous or non-rivalrous. This type of property is publicly owned, but its access and use are managed and controlled by a government agency or organization granted such authority. For example, a government pavement is non-excludable as anyone may use it but rivalrous as, the more people using it, the more likely it will be too crowded for another to join. Public property is sometimes used interchangeably with public good, usually impure public goods. They may also be a club good, which is excludable and non-rivalrous. An example would be paying to go to an uncongested public bathroom, as the price excludes those who can't afford it but there is ample utilities for more people to use making it non-rivalrous. Private property is both excludable and rivalrous. Private property access, use, exclusion and management are controlled by the private owner or a group of legal owners. This is sometimes used interchangeably with private good. An example would be a cellphone as it only one person may use it, making it rivalrous, and it has to be purchased, which makes it excludable. Common property or collective property is excludable and rivalrous. Not to be confused with common property in reference to economics, this is in reference to law. It is property that is owned by a group of individuals where access, use, and exclusion are controlled by the joint owners. Unlike private property, common property has multiple owners, which allows for a greater ability to manage conflicts through shared benefits and enforcement. This would still be related to private goods. An example of common property would be any private good that is jointly owned.
Theory Property rights theory is an exploration of how providing stakeholders with ownership of any factors of production or goods, not just land, will increase the efficiency of an economy as the gains from providing the rights exceed the costs. A widely accepted explanation is that well-enforced property rights provide incentives for individuals to participate in economic activities, such as investment, innovation and trade, which lead to a more efficient market. Implicit or explicit property rights can be created through government regulation in the market, either through prescriptive command and control approaches (e.g. limits on input/output/discharge quantities, specified processes/equipment, audits) or by market-based instruments (e.g. taxes, transferable permits or quotas), and more recently through cooperative, self-regulatory, post-regulatory and reflexive law approaches. In economics, depending on the level of transaction costs, various forms of property rights institutions will develop. In economics, an institution is defined thusly:
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