Chapter 1: Why “Property” - Foreign Military Studies Office - U.S. Army

meaning to the owners’ rights. Some rights can only be given meaningthrough access to a functioning market, and what makes that marketfunctional are the same qualities of accuracy, comprehensiveness andtransparency of information that give the property regime strength as aconflict resolution mechanism.The relationship of an efficient market in real property togeneral economic and social progress is not the direct subject of thisbook. That relationship has perhaps been best treated by Nobel Prizelaureate Douglass North. 25 To economists like professor North, theinstitution of formalized property owes to an advantage over violencein transaction costs, described as follows:Transaction costs are the costs of specifying what is beingexchanged and of enforcing the consequent agreements. Ineconomic markets what is being specified (measured) is thevaluable attributes - the physical and property rightsdimensions - of goods and services or the performance ofagents. While measurement can frequently be costly, thereare some standard criteria: the physical dimensions haveobjective characteristics (size, weight, color, etc.) and theproperty rights dimensions are defined in legal terms.Competition also plays a critical role in reducingenforcement costs. The judicial system provides coerciveenforcement. Still, economic markets in the past andpresent are typically imperfect and beset by hightransaction costs. 2625 See generally, Douglass C. North & Robert Paul Thomas, The Rise of the WesternWorld, A New Economic History, (Cambridge: Cambridge University Press, 1973).26 Douglass C. North. “Lecture to the memory of Alfred Nobel, December 9, 1993,”nobelprize.org at http://nobelprize.org/nobel_prizes/economics/laureates/1993/northlecture.html;see also, as it relates to interstate boundaries, Beth A. Simmons, “Tradeand Territorial Conflict: International Borders as Institutions,” Paper presented at theannual meeting of the International Studies Association, Le Centre Sheraton Hotel,Montreal, Quebec, Canada, Mar 17, 2004 Online . 2006-10-05http://www.allacademic.com/meta/p73352_index.html.35