ORCID
Document Type
Article
Publication Date
2012
Abstract
A persistent theme in the literature on property rights suggests that perfect state protection of private property rights would provide owners with an optimal incentive to invest in their assets. In this Essay, we challenge this view. Specifically, we argue that in many instances, perfect state protection would result in over-investment in resources. This is because perfect enforcement gives rise to a problem akin to the moral hazard problem that plagues insurance markets. In addition to pointing out this problem, we define the conditions under which it may arise in the real world and discuss the measures law should take in order to combat it. To illustrate our thesis, we provide examples of legal rules and doctrines that may be best understood as a response to the moral hazard problem resulting from state protection of private property.
Keywords
property, property rights, Private property, enforcement, moral hazard, Self-help, Preventive measures, investment incentives
Publication Title
University of Pennsylvania Law Review
Repository Citation
Bell, Abraham and Parchomovsky, Gideon, "The Case for Imperfect Enforcement of Property Rights" (2012). All Faculty Scholarship. 572.
https://scholarship.law.upenn.edu/faculty_scholarship/572
Included in
Intellectual Property Law Commons, Law and Economics Commons, Policy Design, Analysis, and Evaluation Commons, Political Economy Commons, Property Law and Real Estate Commons
Publication Citation
160 U. Pa. L. Rev. 1027 (2012)