Private Property Rights

1. Private Property Rights • the right to use the property exclusively • the exclusive right to enjoy income from the property • the right to sell the property outright

2. Transaction Costs • Transaction costs comprise all those costs that cannot be conceived to exist in a Robinson Crusoe (one-man) economy. • Transaction costs are all those costs that are not directly incurred in production.

3. Transaction Costs • 1. Information cost or searching cost • 2. Defining cost or delineating cost • 3. Measurement cost and pricing cost • 4. Negotiating and contracting or exchange costs • 5. Policing and enforcing cost

4. Ways to Reduce Transaction Costs • lthe use of money as a medium of exchange • lthe existence of a market place • lthe existence of middlemen • lan effective government upholding private property rights • lsocial custom

5. Common Property Rights • There is no delimitation or delineation of its use rights to any private party. • No one has the right to exclude others from using it and all are free to compete for its use. • There are no exclusive use rights, no rights to be transferred and no net income can be derived from using the common property.

6. Private Cost • Private cost measures the value of the highest-valued alternative uses of the resources available to the producer, or the person who takes the action.

7. Social Cost • Social cost measures the value of the highest-valued alternative uses of the resources available to the whole society.