Essays on Property Rights and Governance

Colin Harris

Major Professor: Peter T. Leeson, PhD, Department of Economics

Committee Members: Peter J. Boettke, Christopher J. Coyne

Buchanan Hall (formerly Mason Hall), #D135
April 12, 2018, 02:30 PM to 04:30 PM

Abstract:

This dissertation consists of three chapters. The first two chapters explore changes to the property rights regime in Kenya. The third chapter provides an economic analysis of the governance structure used in online pirate networks to mitigate free-riding. 

Chapter one develops and empirically evaluates an economic theory of wealth-destroying private property rights. Privatization’s effect on social wealth depends on whether privatizing an asset confers net gains or imposes net losses on society. The decision to privatize, however, depends on whether privatizing an asset confers net gains or imposes net losses on property decision makers. When decision makers are residual claimants, these effects move in tandem; privatization occurs only if it creates social wealth. When decision makers are not residual claimants, these effects may diverge; privatization occurs if it benefits decision makers personally even if privatization destroys social wealth. Evidence from land privatization in Kenya supports the theory’s predictions: wealth-destroying private land rights were created in Kajiado, Kenya by property decision makers who were not residual claimants and who benefited personally from land privatization. 

Chapter two addresses the debate between the conflict theory and the cooperation theory of institutional change. A critical difficulty in empirically adjudicating between two theories is identified: the hypotheses required for adjudication make non-unique predictions, meaning they cannot illuminate why the predicted relationships are or are not observed. A proposed solution is to treat the two theories as complementary, rather than competing, explanations of institutional change. Evidence from the (re)emergence of common property among Maasai pastoralists in Kajiado, Kenya provides a concrete example of the identified problem and proposed solution. 

Chapter three provides a case study of online pirate communities who use peer-to-peer networks to share copyrighted material illegally. Early scholars of peer-to-peer networks posited the possibility of a total network collapse due to issues of free-riding. When these networks are used to distribute copyrighted material illegally, the increased risk of legal punishment adds a further disincentive to contribute. I use Ostrom's (2005) framework to categorize the rules used in pirate communities to solve collective action problems, evidencing the applicability and robustness of Ostrom's framework for self-governance under less favorable conditions. Through the use of boundary, position, information, and payoff rules, pirate communities are able to mitigate free-riding in the network.