Private Property

Property rights determine who is entitled to use and dispose of resources, both natural and man-made. Private property is a form of property ownership in which an individual, company, or corporation enjoys the associated rights. It thus differs from common property (where a group of people enjoys those rights jointly), state property (where the sovereign ruler or nation is the presumed owner, with the state managing the property), and open access (in which case no property rights have been established).

The nature of private property varies depending on which rights have been conferred upon resource owners by social institutions such as the state or [Page 1430]commonly recognized customs. The “bundle of rights” included consists of varying combinations of the rights to use, sell, rent, lease, destroy, give away, and pass on the property as an inheritance, and to exclude others from its enjoyment. These rights may or may not involve reciprocal obligations or duties on the part of the property owner (for example, ownership of water may be contingent on its “beneficial use”).

While logging may be profitable within the lifetime of a private landowner, replanting that forest would not pay off.

The de jure property rights may not always be recognized by others, and thus there is usually a cost associated with the defense of property rights. These costs are especially high if the difficulties of excluding others from the enjoyment of that property are great or if there is little social acceptance of this particular kind of property. For example, intellectual property rights in seed varieties and their propagation can be difficult to defend while enjoying little popular acceptance; the development of hybrid varieties that do not breed true and of “terminator” genes that prevent the reproduction of seeds are attempts to make private property rights more easily defendable.

Some resources, such as air to breathe, are generally regarded as nonexcludable: others could not possibly be prevented from using them. Other resources may be nonexcludable for social or technological rather than physical reasons; for example, where communal grazing rights are the norm, an individual's claim to private property rights to grazing land would not be respected. A resource may also be nonexcludable for reasons of cost, for example, if the costs of fencing land exceed its benefits to the property holder. Hence, private property rights can only emerge where excludability is possible in practice as well as theory.