William Hubbard


Communication about property rights is essential to our lives. Property rights determine fundamental aspects of our behavior, such as where we can walk, live, and work. For these rights to have meaning, many parties must communicate. For example, potential buyers, potential trespassers, and authorities must understand the nature and extent of an owner's property. This communication involves costs, like the costs of fencing or of surveying the boundaries of a parcel of land before constructing a building. These costs must be balanced against the benefits of successful communication, which include the gains from transferring entitlements and the cost reductions of avoiding infringements of property rights. Prevention of infringement through successful communication may be cheaper than securing redress for infringed entitlements. For example, if the boundaries of a parcel of real property are not accurately communicated, an adjoining owner may construct a building that spans the property line. Even if the encroachment is small, the misplaced building may have to be demolished. Communication costs are a type of transaction cost, and should be addressed in an efficient manner-that is, additional communication costs should be incurred until the marginal costs exceed the marginal benefits.

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