![]() ![]() ![]() Thus, state recognition of property rights is required to achieve the most efficient use of resources, but only because the state is the primary threat to those rights.īack in the real world, Ben Casnocha writes, ![]() When a strong coercive power can limit exit, economic success requires that property rights be recognized and supported by that power - that is the essence of a protection racket. Imagine that the pirates numbered in the millions and they could easily jump ship to join competing groups mid-voyage would the arrangements Leeson describes have been sustainable? When the size of the in-group becomes large and mobility allows opportunistic behavior to go unpunished, it becomes difficult to maintain cooperation. I need to be able to observe whether you are behaving according to the rules, and if not, I have to be able to sanction you. ![]() Cooperation under “anarchy” is based on reciprocity, which in turn requires observability. One of the findings from Elinor Ostrom’s extensive case studies is that self-enforcing arrangements to manage the “commons” work well only when the geographic scope of the activity is clearly delimited and membership is fixed. The problem with self-enforcing agreements is that they do not scale up. ![]()
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