ECO320Y5 Chapter Notes - Chapter 5: Pareto Efficiency, Estray, Specific Performance

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23 Jan 2018
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In the event of a dispute about ownership, determination of who first possessed the property in question is usually straightforward. The transfer effect under the rule of first possession thus causes over- investment in the activities that the law defines as necessary to obtain legal possession. These requirements were meant to minimize transfer effects and to encourage production. In practice, however, the requirements were fleetingly enforced and easily evaded. ) In general, the second rule, called the rule of tied ownership, ties ownership of fugitive property to settled property. The common and civil law often tie ownership by applying the principle of accession. Property that is accessible for use by a broad public is called an open access resource: example of fishing: the maximum sustainable yield is the largest yield sustainable in the long run. To maximize the yield, the application of labor and capital must expand until the marginal products of labor and capital are zero.

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