Property Rights
Carmel Secondary School
Carmen & Kyle
Scarcity  Competition  Discrimination
Property rights are a set of rules
which serves to allocate scarce goods
among the competitors.
No scarcity  Property Rights need not exist.
Price ($)
D
S
Quantity
0
As property rights should only be applied on
scarce goods, free goods like air, seawater, in
general cases, are not considered with property
rights.
Two kinds of Property Rights
Private Property Rights
1) the exclusive right to use;
2) the exclusive right to income;
3) the right to transfer.
Common Property Rights
A good is a common property if
there is no delimitation or
delineation of its use rights to any party.
Private Property Rights
Houses
Example 1~
Private property
The owner can
- exclude others from
using it or getting into
the house.
- capture income from
renting it out
- freely transfer it to
others by selling it.
Common Property Rights
Beaches~
No one has the right to exclude
others from using it and everyone
is free to compete for its use.
Dissipation of rent
An economic proposition which
asserts that the potential rent is not
captured in which private property
rights are absent or attenuated.
Case 1
Drinking machine
- Everyone has the right to use it.
- Consumers make wasteful use of
the filted water ~ e.g. washing hands.
thus
Although
Sometimes
for the
theindividuals,
itcost
is convenient
of filted
thewater
convenience
to wash
is more
hands
expensive
with
than
outweighs
the infilted
filted water
thewater,
loss
which
of
theinefficient
loss
come
is out
shared
use
from
of
bythe
thedrinking
filted
wholewater.
society,
machine.
>>
>>
The use value of the filted water decline.
Case 2
Public Basketball court
Transaction cost is increased
No one has the right to exclude others from using it.
Everyone is free to compete for its use.
People form groups and take turns to have it used, thus sometimes queues
are formed and time cost is increased for the consumers.
Case 3
Basketball court in a gymnasium
Consumer who has booked it has the exclusive
right to use it over a period of time, queues are
not formed and the time for waiting can be used
to do something more meaningful.
Case 4
Public toilets
over-exploitation lowering its value
- Everyone is free to use it. They are
always dirtier than private toilets
and the tissue paper and water are
used inefficiently. $
MUV
Deadweight loss
MC to the public
0
Tissue
Assuming that the marginal cost of tissue paper & water are constant,
As the charge for additional use of them are zero, everyone will
there will
beuse
wastage.
As thepeople
toiletsuse
are the
nottoilet,
ownedthe
bydirtier
any party,
the
Everyone
can
it,
the
more
it
consume the tissue paper and water until his marginal use value
loss be
from
wastage
be &
shared
of them and the loss
will
andthe
more
tissuewill
paper
waterbyareallused.
diminishes
to zero.
become deadweight loss of the whole society.
Intellectual Property
Intellectual property refers to creations of the mind:
inventions, literary and artistic works, and symbols,
names, images, and designs used in commerce.
Intellectual property is divided into two categories
Industrial property
nventions (patents), trademarks, industrial
esigns, and geographic indications of source
Copyright
literary and artistic works such
as novels, poems and plays,
films, musical works, artistic
works
Someone said
“If private intellectual property rights are
enforced badly, creation will no longer exist.”
example
FilmFor
making
industry
P($)
With existence of substitutes (pirated CD),
demand for official CDs decreases
D decreases to D’, MR
decreases according to MR’
MC
AC
Q decreases and TR
decreases to the designer
P
P’
0
MR’ MR
Q’ Q
D’
If the demand decreases to a
level that AC lies beyond D so
the designer would not produce
 the industry will disappear
D
Quantity (units)
o拿…咁common property咁多唔好處，
點解佢仲可以生存先？唔…好似公
o下？有咩Transaction
cost 呀？
園咁～
但係咁喎…要維持Private Property Rights
好似介定同埋維持呢o的產
都要付出Transaction cost！如果Transaction cost係
權時所須o既成本都可算係.
大過個capturable
rent，ｏ的人咪寧願採用
Common Property Rights囉！
Someone said “Under private property right, some
animals are protected and prevented from extinction.”
When
Obviously,
the private
despite
property
the huge
rightsnumber
are adopted,
of poultry
owners
have
are the
killed
right
everyday,
to exclude
its number
other from
is increasing
hunting their
animals,
day
day.they
In contrast,
will waititrights
until
is easy
the
poultry
the wild
become
When
thebythus
common
property
arefor
adopted,
people
animals,
over
which
people
do not
mature
or hunt.
even
reproduce
little
for
sakeother
of
compete
to
As
they have
to poultry
hunt
asadopt
fastthe
asprivate
the
property
rights,So
to we
extinct.
maximizing
wealth.
seldom
seeto
thegrow
poultry
extinct.
hunters, they
don’t let
the
animals
bigger.
>>
>>
但係我地個個都有權用學校o既野喎。
Carmen
呀，我地學校算唔算係一種
好似圖書館，籃球場同埋洗手間咁。
common property呀？
其實呢d設施對於學校 o黎講
可以話係…但又可以話唔係
係private property,因為學校有權
喎～
阻止其他人用。而我地身為呢間學
校o既學生，所以對我地o黎講學
校就係common property喇!
THE END
Thank You