The Tragedy of the Anticommons: Property in the Transition from Marx to Markets

Summary of: The Tragedy of the Anticommons: Property in the Transition from Marx to Markets

Author(s) / Editor(s)

Care in allocation of property rights in transitional economies (e.g., from state to private control or under rapid technological change) is essential to prevent <em>the tragedy of the anticommons</em>, the underuse of valuable resources.

Disciplines

Publication Reference

Published in/by
Davidson Institute Research Workshop on the Economics of Transition and Harvard Law Review, Volume 111 (3) (pp. 621-688)
Date
June 1997 and January 1998

Findings

  • An anticommons property is a scarce resource in which multiple owners have the right to individually exclude others from its use, and no one has an effective privilege of use. Stalemate results in the tragedy of the anticommons, the underuse of a property.
  • Anticommons property appears when new property rights are being defined and allocated without mechanisms for resolving ownership disputes, notably in economies making a transition from state to private control.
  • A tragedy of the anticommons results when property theorists and implementers of property redistribution in transitional societies focus unduly on the clarity of rights (who is entitled to a share) while giving short shrift to the content of useful property bundles.
  • Once an anticommons property appears, it is difficult to convert it into useful private property either through market means or subsequent regulation due to transaction costs, holdouts, and individual attempts to extract the greatest return. Informal mechanisms of dubious legality sometimes fill the gaps.
  • The notion of the anticommons has implications for the distribution of environmental and intellectual property rights.

Anticommons property is defined to be a class of property in analogy to the commons in classical economic literature to explain some of the failures and difficulties in the transition from communist to market economies. Multiple owners have privileges in a resource in a commons. The overuse of that resource has been described, notably by Hardin, as the tragedy of the commons. Heller defines an anticommons property as a scarce resource in which multiple owners have the right to individually exclude others from its use, and no one has an effective privilege of use. Stalemate results in the , the underuse of a property.

Heller examines a paradox in Moscow after the dissolution of the Soviet Union. Storefronts remained empty even though the economy was growing and there was demand for consumer goods. In contrast, street kiosks in front of them filled with goods and customers.

He maintains that the phenomenon is due to a tragedy of the anticommons, an underuse of scarce resources due to the allocation of multiple new owners with the rights to exclude others from its use.

He compares the distribution of rights in commercial property (previously owned by the state with overlapping bureaucratic stakes) with other types of properties (e.g., individual apartments, communal apartments, and street kiosks.) In the latter cases, sometimes legal but more often brutally questionable means of resolving rights disputes results in more widespread use of resources in the absence of appropriate legal recourse.

While Heller devotes most of his attention to the underuse of commercial property in Moscow and other cities in the former Soviet Union, the notion of the anticommons has implications in the distribution of environmental and intellectual property rights.

Anticommons property may emerge in developed markets wherever new property rights are being defined. This can occur when new technologies make possible uses of, for example, intellectual property and environmental rights, unanticipated by the previously existing legal mechanism.

Once anticommons property appears, it is difficult to remedy the situation either through markets or subsequent regulation. Rather, Heller argues that care must be taken to avoid the accidental creation of anticommons property when new property rights are being defined by conveying core bundles of rights rather than multiple rights of exclusion.