Chapter 14 - Challenge to market effectiveness 4: Inadequate property rights. After reading this chapter, you should be able to answer the following questions: What are property rights? How do property rights create wealth? What is the tragedy of the commons? What are different categories of goods? What is a public good? Why does the market fail to produce public goods? What is intellectual property? How do real estate property rights help people? | Chapter 14 Challenge To Market Effectiveness 4: Inadequate Property Rights McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved. Learning Objectives What are property rights? How do property rights create wealth? What is the tragedy of the commons? What are different categories of goods? What is a public good? Why does the market fail to produce public goods? What is intellectual property? How do real estate property rights help people? 14- Property Rights To have property rights in a good means one can use the good oneself, sell it to others or prevent others from using the good. A prime reason for widespread devastating poverty is the lack of adequate property rights. When property rights aren’t secure, markets have difficulty creating wealth. 14- Pain Before Pleasure Businesspeople must invest their time and resources before earning a profit. Without property rights, the initial pain of investment often leads to disappointment rather . | Chapter 14 Challenge To Market Effectiveness 4: Inadequate Property Rights McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved. Learning Objectives What are property rights? How do property rights create wealth? What is the tragedy of the commons? What are different categories of goods? What is a public good? Why does the market fail to produce public goods? What is intellectual property? How do real estate property rights help people? 14- Property Rights To have property rights in a good means one can use the good oneself, sell it to others or prevent others from using the good. A prime reason for widespread devastating poverty is the lack of adequate property rights. When property rights aren’t secure, markets have difficulty creating wealth. 14- Pain Before Pleasure Businesspeople must invest their time and resources before earning a profit. Without property rights, the initial pain of investment often leads to disappointment rather than to pleasurable profits. People without property rights often have no incentive to suffer the initial pain that investment requires. For example, because it lacked secure property rights, few people invested in Russia. 14- Securing Property Rights Creating secure property rights is difficult. For property rights to be secure, they must be respected at many levels of society. The central as well as local governments must refrain from arbitrary confiscation. In addition, secure property rights require honest courts that can adjudicate disputes among businesspeople and honest police who prevent criminal gangs from seizing property. Secure property rights also require families to respect the individually owned property of their members. 14- Property Rights For property rights to create wealth, they must belong to individuals, not groups. The wealth-creating superiority of individual over collective property rights was well shown by Soviet agriculture. Peasants had to farm the .
