Elinor Ostrom by Vlad Tarko

Author:Vlad Tarko
Language: eng
Format: epub
Publisher: National Book Network International

To make matters worse, even when private property could in principle provide a proper solution, governments often pursue privatization as a top-down strategy, while misunderstanding the subtleties of private property arrangements, in particular, the feasibility of club-like arrangements. The biggest misconception about private property is that it necessarily involves individual ownership. As shown by examples such as joint-stock companies and other corporations, it is often desirable to have multiple owners of a private enterprise (see Kuran 2005; Leeson 2014; Stringham 2015). Not understanding this, most “campaigns to create private property rights tend to consist of transferring ownership from larger entities and groups to individuals.… Most privatization campaigns would ignore or even oppose the assertion that there may be conditions when it is more desirable for clear, specific, secure, and exclusive rights to be vested in a group rather than in single individuals” (Gibson, McKean, and E. Ostrom 2000, 7). This strategy can easily backfire when “these interventions may destroy the property-rights arrangements that they should want most to create” (p. 7), especially by heightening problem 4 mentioned above, regarding monitoring and enforcement.

We can understand this as a trade-off between the costs and benefits of inclusion (Figure 3.4). The strategy to try to privatize everything to individual level ignores the marginal benefits curve and only pays attention to the increase in collective action problems such as the possibility of free-riding. For instance, this trade-off determines whether a company decides to go public and how many shares to issue. Going public has the benefit of attracting more capital (inclusion), but has the cost of diminishing the decision-making control that the original owners and founders of the company have. The same logic applies much more generally, and assuming that private property is necessarily individual, rather than club-like, can lead to serious public policy errors by hampering various parties from capturing the benefits of inclusion in larger clubs.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.