Property Rights in Historical Political Economy: When do Wedges Wither?
Working Paper 29991
Countries are not equally developed in large part because most countries face sets of property rights that do not foster growth despite the aggregate gains that would result from changing property rights. The difference in rents to society between the extant set of property rights and some seemingly better alternative we define as a “Demsetz” wedge. We explore the forces that sustain the status quo as well the forces that prompt property rights to change.
We thank Douglas Allen, Eric Alston, Jeffrey Jenkins, Gary Libecap, Thomas Nonnemacher and Jared Rubin for comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.