Abstract:
Common law and civil law property appear to be quite different, with the former emphasizing pieces of ownership called estates and the latter focusing on holistic ownership. And yet the two systems are remarkably similar in their broad outlines, for functional reasons. This paper offers a transaction cost explanation for the practical similarity and the differing styles of delineating property and ownership in the two systems. As opposed to the “complete” property system that could obtain in the world of zero transaction costs, actual property systems employ structures characterized by shortcuts in order to achieve property’s substantive goals of protecting interests in use. Overlooking this structure leads to the bundle of rights picture of property, even though property is a structured bundle of relationships. The architecture of property consists in part of four basic relationships, and a number of characteristic features of property automatically arise out this architecture, including exclusion rights, in rem status, and running to successors. Where civil law and common law differ is in their style of delineation, which reflects the path dependence of initial investment in feudal fragmentation in the common law and Roman-inspired holistic dominion in civil law. This transaction cost explanation for the functional similarities but different delineation process in the two systems promises to put the comparative law of property on a sounder descriptive footing.
Chang, Yun-chien and Smith, Henry E., An Economic Analysis of Civil versus Common Law Property (February 17, 2012). Notre Dame Law Review, Forthcoming.
