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rule tends to encourage races to find the effectively unowned property. In any event, if original owners retain property rights, finders may simply hide what they find, which reduces the value of what is found without producing the aforementioned benefits to original owners. 3.5.3. Acquisition of stolen property and problems of establishing valid title. A basic difficulty associated with sale of property that a legal system must solve is establishing validity of ownership or title. How does the buyer know whether the seller has good title, and how does the buyer obtain good title? If these questions are not readily answered, sales transactions are impeded, and theft may be encouraged. One route that legal systems may take involves the use of registration systems: lists of items and their owners. Important examples are registries of land, ships, motor vehicles, and many financial instruments. Presuming that an item is recorded in a registry, it will be easy for a buyer to check whether the seller holds good title to it, and the buyer will obtain title by having his name recorded in the registry as the new owner. Also, a thief obviously cannot claim that something he has stolen is his if someone else s name is listed as the owner in the registry. Registries are usually publicly established, and listing in registries often is mandatory (or it may be encouraged by making registration a condition to asserting a valid legal claim). Partial explanations for the public role in registries are the coordination problem that may be involved in creating them and the problem of insufficient private incentives to register property to provide a general deterrent against theft. (An individual contemplating registration will not take into account that, as the proportion of registered property rises, thieves anticipate that it will be more difficult to sell stolen property and thus are discouraged from theft.) For most goods, however, registries do not exist because of the expense of establishing and maintaining them relative to the value of the goods and of the deterrence of theft. Two legal rules for determination of title are available (and both, to some extent, are employed) in the absence of registries. Under the original ownership rule, the buyer does not obtain good title if the seller did not have it; the original owner can always claim title to the item if he can establish his prior ownership. Under the bona fide purchaser rule, a buyer acquires good title as long as he had reason to think that the sale was bona fide (that the seller had good title) even if the item sold 46 For a survey of relevant literature, see Lueck (1998). 47 Other laws limit indirectly how much property can be taken by individuals by giving them title only if they make productive use of the property that they find. This was true of homestead laws that gave land to individuals who worked it and of water rights regimes that gave priority to the extent that water supplies were regularly used. Such rules, however, - 20 - create excessive incentives to exploit property. was previously stolen or otherwise wrongfully obtained. These rules have different effects on incentives for theft. Notably, under the bona fide purchaser rule, theft is made attractive because thieves will often be able to sell their property to buyers (who will be motivated to believe that the sale is bona fide); the buyers can use the now validly-held property or resell it. Another social cost of the bona fide purchaser rule is that original owners will spend more to protect their property against theft because theft will be more frequent and, when it occurs, owners will be less likely to recover their property. (These costs of protection, note, are analogous to those arising under the rule allowing finders of lost property to keep it.) Finally, under the bona fide purchaser rule, buyers will not have an incentive to expend effort determining whether there exists a third- party original owner. This is an advantage in the direct sense that it reduces transaction costs, but it also compromises deterrence of theft. 3.5.4. Involuntary transfer of property: adverse possession. The legal doctrine of adverse possession effectively allows involuntary transfer of land (and some other types of property): a person who is not the owner of land becomes its legal owner if he takes possession of it and uses it openly and continuously for at least a prescribed period, such as ten years. Some have suggested that a rationale for the rule is that it permits the transfer of land from those who would leave it idle to those who will use it productively. But this overlooks the possibility that there may be good reasons for allowing land to remain idle (perhaps it will be built upon later, and thus an investment in it now would be a waste). Furthermore, a prospective adverse possessor could always bargain with the owner to rent or buy the land. Additionally, the rule suffers from the disadvantage that it induces landowners to expend resources policing incursions onto their land and it encourages others to attempt adverse possession. (Observe that these latter arguments are similar to those in the preceding sections that favored rules protecting original owners.) A historical justification for the rule is that, before reliable land registries existed, it allowed a landowner to establish good title to a buyer relatively easily: the seller need only show that he was on the land for the prescribed period. Another advantage of the rule is that it reduces disputes that would arise where structures turn out to encroach on neighboring parcels.48 3.5.5. Constraints on sale of property. Legal restrictions are often imposed on the sale of goods and services, including taxation and the outright banning of sale. One standard justification for such policies is externalities. For example, the sale of handguns may be made illegal because of the externality their ownership creates, namely, crime, and a tax may be imposed on the sale of a fuel because its use pollutes the air. See section 3.6. The other standard justification for legal restrictions on sale is lack of consumer information. For instance, a drug may not be sold without a prescription because of fear that buyers would not use it appropriately. Here, though, one must [ Pobierz całość w formacie PDF ] |