Diluted property rights theory is a macroeconomics theory proposed by founder of Holland Meissner Company, Amber Persons (formerly known as Monica Lester). The theory is meant to serve as an extension of property rights theory. Property rights theory has not received substantial theoretical or empirical attention despite its potential to explain various phenomena dealing with business transactions. [1] Diluted property rights theory addresses this lack of progression by approaching property rights theory from the position of approximating the conditions that actually exist when rights are negotiated, exchanged, and handled.
This is the same approach that Nobel Prize winner Ronald Coase took when discovering and clarifying the significance of property rights. [2] While property rights theory defines property rights and delineates how the rightful owner of such rights may use, enforce, transfer, and benefit from them, diluted property rights theory attempts to define a pervasive violation of a principal of property rights theory. Writing from a legal perspective, Coase explains how property rights should be delimited. [3] According to Coase, such rights should go to the party that can create the most public benefit. However, property rights are often diluted and the party that can create the most public good are not always granted such rights. [4]
Diluted property rights are created when:
The theory holds that the event need not be reoccurring to make a lasting impression. In addition, diluted property rights are not extended to incidental violation of the law that reaves a rightful owner of his rights. Diluted property rights theory is concerned with widespread weakening of rights that are dictated by policy, law, and norms. The concern is that the continued weakening of property rights will have long-lasting wide spread effects that may be disadvantageous to the world economy. This concern is valid in so much as well protected property rights have created long-lasting benefits to corporations. [6]
Diluted property rights have often been approached as a minor topic in traditional business research. For example, in his book Internal Research & Development Markets, Eric Kasper offered two examples of how rights can be diluted: 1) the exploitation of R & D results by a business unit, and 2) the simultaneous sharing of rights by several individuals. [7] However, in trademark law, dilution from a legal and intellectual rights perspective is well-documented. [8] [9] [10]
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Ronald Harry Coase was a British economist and author. Coase was educated at the London School of Economics, where he was a member of the faculty until 1951. He was the Clifton R. Musser Professor of Economics at the University of Chicago Law School, where he arrived in 1964 and remained for the rest of his life. He received the Nobel Memorial Prize in Economic Sciences in 1991.
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This aims to be a complete article list of economics topics:
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Law and economics, or economic analysis of law, is the application of microeconomic theory to the analysis of law. The field emerged in the United States during the early 1960s, primarily from the work of scholars from the Chicago school of economics such as Aaron Director, George Stigler, and Ronald Coase. The field uses economics concepts to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated. There are two major branches of law and economics; one based on the application of the methods and theories of neoclassical economics to the positive and normative analysis of the law, and a second branch which focuses on an institutional analysis of law and legal institutions, with a broader focus on economic, political, and social outcomes, and overlapping with analyses of the institutions of politics and governance.
In law and economics, the Coase theorem describes the economic efficiency of an economic allocation or outcome in the presence of externalities. The theorem is significant because, if true, the conclusion is that it is possible for private individuals to make choices that can solve the problem of market externalities. The theorem states that if the provision of a good or service results in an externality and trade in that good or service is possible, then bargaining will lead to a Pareto efficient outcome regardless of the initial allocation of property. A key condition for this outcome is that there are sufficiently low transaction costs in the bargaining and exchange process. This 'theorem' is commonly attributed to Nobel Prize laureate Ronald Coase.
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Harold Demsetz was an American professor of economics at the University of California at Los Angeles (UCLA).
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