CONCEPTUAL FOUNDATIONS OF PROPERTY RIGHTS: RETHINKING DEFACTO RURAL OPEN ACCESS… 3
they still needed “extensive territories, though not equal to those required by the
hunters”.4 After the emergence of agriculture, however, “a comparatively small
space sufficed to supply each one with the means of subsistence”, and it is
mainly after this period that people “fixed their habitations, and around them
fixed landmarks, each one appropriating as much land” as was necessary to
“supply his family with food.”5
The acquisition of land in Europe until the downfall of the Roman Empire,
for example, was limited to the needs of the family and the ability to cultivate
until the Empire’s northern conquerors introduced their pre-agricultural “habits
of life” to land appropriation. Even if agriculture continued in the Roman
Empire, the new rulers kept their habits of having herds of cattle and swine. As
“each chief required a large space to supply himself and his family and followers
with food,” land was appropriated “not according to what quantity each man
could dig by his hand, but rather according to the quantity his horse could gallop
Various views are forwarded regarding why and how property rights in land
emerged. The major views include the factor of efficiency (and transaction cost)
and the principle of first appropriation.
1.1- Factors of efficiency and transaction cost in the genesis of
Demsetz discusses the impact of commercial fur trade in the indigenous
communities of North America and he states that exclusive property rights
emerged owing to the adverse impact of overhunting under the setting of open
access. Under such circumstances, there is the need for well-defined rights with
regard to access, use, control, withdrawal and alienation along with the
subsequent duties of protection and development of the resources.
Demsetz7 states the absence of private ownership in land in various
communities which hunted for food. In these communities, the same act of
hunting by others (i.e. externalities) does not affect the needs of every member
of a community to hunt for subsistence as long as the resources are abundant
and other variables remain unchanged. Demsetz used the studies conducted in
North American communities for his analysis. He observes that after the
emergence of commercial fur, there was an increase in the value of furs which
5 Ibid, p. 65.
6 Ibid, p. 71, for the quotes in the paragraph.
7 Harold Demsetz (1967), “Toward a Theory of Property Rights”, The American
Economic Review, Vol. 57, No. 2, Papers and Proceedings of the Seventy-ninth
Annual Meeting of the American Economic Association. (May, 1967), pp. 347-359.