Quotes from “The Exchange and Enforcement of Property Rights”

By Harold Demsetz (1964)

• The provision of a market (for the side effect [externality]) is itself a valuable and costly service.#
  Economics
• If [a] service is not bring produced some inequalities (instead of the equalities required for produced goods) among our marginal rates of substitution and marginal rates of transformation may be consistent with efficiency, as will be the case if the cost of taking account of side effects through either the market or the government exceeds the value of realigning resources.#
  Economics
• If we insist wither that all actions (services or commodities) be priced in the market or that the government intervene, we are insisting that we do not economize on the cost of producing exchanges or government services.#
  Economics
• The value of what is being traded depends crucially on the rights of action over the physical commodity and on how economically these rights are enforced.#
  Economics
• If we assume that it costs nothing to police property rights, it follow that there exists a direct relationship between the degree to which private benefits approach social benefits and the degree to which the conveyed property rights are enforced.#
  Economics
• [Property rights’] existence is probably due in part to its great practicality in revealing the social values upon which to base solutions to scarcity problems.#
  Economics
• A proper definition of a right of action include the degree to which the owner or the community is allowed to enforce the right.#
  EconomicsPolitics
• It is, of course, necessary to economize on police cost, so that we will not always want to guarantee full control to the purchaser.#
  EconomicsPolitics
• Even though extending the use of an existing bridge to additional persons adds nothing to the direct cost of operating the bridge, there is good reason for charging persons for the right to cross the bridge. Excluding those who do not pay for the use of the bridge allows us to know whether a new bridge is likely to generate more benefit than it is likely to cost.#
  Economics
• If we must distinguish among goods, we had best do away with the “public goods” vs. private goods dichotomy and instead classify goods according to whether they are truly free or economic and classify economic goods according to whether marketing costs are too high relative to the benefits of using markets and to the costs of substitute non-market allocation devices.#
  Economics
• Is not valuation information one of the most important public goods?#
  Economics
• There exist no qualitative differences between side effects and what we may call “primary” effects. The only differences are those that are implicitly based on quantitative differences in exchange and police cost.#
  Economics