Ownership, Property Rights, and Economic Performance: A property right is an enforceable authority to undertake particular actions in specific domains.

. The rights of access, withdrawal, management, exclusion and alienation can be separately assigned to different individuals as well as being viewed as a cumulative scale moving from the minimal right of access through possessing full ownership rights. All of these rights may be held by single individuals or by collectivities. Some attributes of common property are conducive to the use of communal proprietorship or ownership and others are conducive to individual rights to withdrawal, management, exclusion and alienation. Ownership and property have practically the same meaning in English: the right to possess something, to control it, to determine its use, to receive the benefits from its use, and to dispose of it. property rights (which could be called "ownership rights") refers to the specific content and extent of the rights possessed by property owners, particularly the limitations that may exist on the exercise of those rights and the nature of enforcement of those rights. Property rights are never absolute, since the exercise of control over property may harm individual or social interests and so property rights typically have certain limits.

 Many economists assert that only private ownership of enterprises can result in an efficient, and more generally an effective, economy. This viewpoint has been very influential and has provided the intellectual justification for the privatization of many formerly public enterprises, in the West, in the formerly socialist countries in Eastern and Central Europe, and in the developing countries of Asia, Africa, and Latin America, including in China. However, a number of countries that undertook major privatization programs did not gain the benefits that had been promised. In particular, in Russia and in Latin America serious economic and social problems have followed programs of mass privatization. A number of serious economic and social problems followed programs of mass privatization corruption, increased criminal activity theft of assets from formerly public enterprises mass layoffs of workers Growing inequality Disappointing performance by privatized enterprises. Public Ownership A public good is publicly provided for i.e. the good is paid for by the state. E.g. Schooling is a publicly provided good. There are various types of public ownership of enterprises some of which are owned by the governments and states or locals. Once a pure public good is provided, the additional resource cost of another person consuming the good is zero. The public
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good is non-rival in consumption". Examples: lighthouse, national defense, streets (if non-congested), radio broadcast Excludability: Public goods which are excludable could in principle be provided by the private sector (example: Pay-TV). Public goods which are non-excludable certainly cannot (example: National defense) be provided by the private sector. The Potential Advantages of Public Ownership Publicly owned enterprise can follow aims other than just profit maximization. It can pursue various public aims that have been decided on by the authorities to whom it is responsible. For example, public enterprises may continue to make investments when the economy is entering an economic recession, while private enterprises are rapidly cutting their production and investment. Not being responsible to profit-hungry shareholders, public Ownership, Property Rights, and Economic Performance enterprises can take a long view, realizing that a recession will eventually end, and that investing during a recession is a good policy since financing is cheap and there is ample excess productive capacity in the economy. E.g. China's state owned enterprises have tended to invest "counter-cyclically." That is, when economic growth has tended to slow down, they have increased their investment. This has helped to stabilize the Chinese economy, maintain economic growth, and avoid recessions. Public enterprises can plan investments with an aim to increase development in less developed regions of a country. This may
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not be the most profitable investment in the short run, but it reduces regional inequality, contributes to overall economic development, and helps to maintain the unity of a nation. Publicly owned banks can be directed to make loans only for productive investments rather than speculative purposes. They can be required to make loans to new industries that are not yet very developed but which have a long run potential to become successful. Privately owned banks will tend to make loans to whatever borrower promises the highest profit to the bank's owners, of course with due regard for risk. This can lead to lending for speculative investment and also loans that favor industries that are already well developed rather than those that have a future long-run positive potential. Private owners tend to be impatient. A higher share of state owned enterprises in the economy is associated with a higher long-run rate of economic growth. Income inequality is lower in countries with a large share of publicly owned enterprises. This was not surprising, since public enterprises tend to pay relatively high wages and have a relatively narrow range between their highest and lowest pay rates compared to privately owned enterprises. Public enterprises tend to offer secure jobs that last a long time. They are often criticized for this. However, people need stability in their lives. Public enterprises (whether owned by the central or local government or take the form of a collective) do not exploit their workers. By contrast, the owners of private enterprises exploit their workers, gaining profits from the labor of their workers just
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by owning the enterprise. Exploitation of labor creates a very wealthy class. This wealthy class tends to become powerful over time.

Private ownership Private ownership: individual, partnership, or most importantly the corporate form of private ownership for larger enterprises The prices of goods and services from publicly owned companies are cheaper than from privately owned goods and services. Goods and services from privately owned companies are strictly regulated by government agencies. There were many problems with this system of regulation, including that the private companies have significant influence over the regulatory authorities. However, public regulation forces the privately owned companies to behave, in certain respects, like public enterprises. Their prices are determined by the state, their rate of profit is controlled by the state, and they are required to invest in additional production. It is thought as the only way to avoid the tragedy of the commons in natural resources and wildlife is to end the common property system.

Common Property Ownership CP regime" refers to "a property rights arrangement in which a group of resource users share rights and duties towards a resource. Communal resources present two major attributes: subtractability (any use subtracts from what remains for subsequent uses) and difficulty of exclusion (the nature of the resource presents difficulties for demarcating boundaries). Examples of such resources: fisheries, forests, groundwater, and the stratosphere. Communal resources that exist as public property, CP, or open access tend to be scarce, unpredictable, or variable through time and space Where land is open access, degradation usually occurs because limits on exploitation do not exist (this is the "tragedy of the commons" scenario, which has often been misinterpreted as applying to all communal resources including those under CP institutions). CP exists when communal resources are owned and managed by the groups that use them, in effect creating joint private property. Similar to private or public management, the sustainability of natural resources under CP management depends upon the decisions made about forms of exploitation, rates of use, and enforcement of user rights Common property can provide certain advantages for the rural poor, particularly by fostering equitable access to subsistence resources. Natural resources on non-private lands provide subsistence for millions of people in Asia, sub-Saharan Africa, and Latin America.

 Most of these communal resources represent economically marginal lands. While some of these lands are open access (lacking a relevant property regime), a portion is held as common property (CP) under the management of local groups. For rural communities in the arid and semi-arid regions of India and Africa, communal lands represent high-risk, low productivity areas that nevertheless provide important resources for the population. These include food, fiber, fodder, fuel for cooking, and water. Such open access is a ticket to abuse As an alternative to open access, CP may provide equitable access and distribution of resources for poor populations. CP can present lower costs of administration and maintenance as compared to a private property system, resulting in efficiencies for higher levels of government and savings in titling fees for poor populations. Privatization into small parcels would not guarantee access to scarce, mobile, or dispersed resources. Creation of private parcels has often been seen as a solution to rural poverty, but in fact privatization programs have tended to exacerbate the impoverishment of the poorest segments of the population, and exclude relatively powerless groups (including women, children, and minority groups) from formerly common lands. Preservation of CP could be justified as a component of development programs concerned to promote equity and participation.
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 Unfortunately, economic policies, development initiatives, and political convictions based upon an assumed superiority of private property have tended to undermine CP regimes. CP regimes can encompass the advantages of participatory, community-based development programs and co-management plans. This is particularly true for programs aimed toward sustainable management of renewable natural resources. Local users have a better understanding of their needs and their environment than do external agents, and have often developed institutions that fit uniquely to their needs and circumstances. Common property regimes are presumed to be inefficient. There are three sources of inefficiency rent dissipation, because no one owns the products of a resource until they are captured, and everyone engages in an unproductive race to capture these products before others the high transaction and enforcement costs expected if communal owners were to try to devise rules to reduce the externalities of their mutual overuse Low productivity, because no one has an incentive to work hard in order to increase their private returns Common property regimes are presumably retained by rulers who do not understand the enhancement in overall economic welfare that will result from a change to private property or who

are supported by those who benefit from these archaic regimes.

There are two important characteristics in common property regimes i) the exclusion of resource users to these resources is difficult. ii) the use of resources by one person subtracts from the welfare of other users Natural products like trees, water, wildlife, are subtractable, and in most cases, exclusion will be problematic and costly. If one individual uses more, less remains for another. These resources are therefore potentially subject to depletion or degradation. i.e. use which is pushed beyond the limits of sustainable yields -they share the first attribute with pure public goods; the second attribute, with pure private goods. common property resource can also be defined as the resource held by an identifiable community of interdependent users in which these users exclude outsiders while regulating use by members of the local community. Within the community, rights to the resources are unlikely to be either exclusive or transferable; they are often rights of equal access and use (Feeny et al, 1998). The rights of the group may be legally recognized or in some cases it may be de facto rights.

Seven characteristics of common property resources have been identified which are regards as a set of necessary and sufficient conditions for a successfully managed common property The resource unit has bounds that are well defined by physical, biological, and social parameters. There is a well-delineated group of users, who are distinct from persons excluded from resource use. Multiple included users participate in resource extraction Explicit or implicit well-understood rules exist among users regarding their rights and their duties to one another about resource extraction Users share joint, nonexclusive entitlement to the in situ or fugitive resource prior to its capture or use. Users compete for the resource, and thereby impose negative externalities on one another. A well-delineated group of rights holders exists, which may or may not coincide with the group of users. A common property regime represents private property for the group of co-owners (since all others are excluded from use and decision making) and individuals have rights (and duties) with respect to the resource in question. Common property is said to be similar to private property in a sense that there is exclusion of non-owners. The propertyowning group may vary in nature, size, and internal structure across a broad spectrum, but it is a social unit with definite membership and boundaries, with certain common interests,
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with at least some interaction among members, with some common cultural norms, and often their own endogenous authority system The management group (the owners) has the right to exclude non-members, and non-members have a duty to abide by exclusion. Individual members of the management group (the coowners) have both rights and duties with respect to use rates and maintenance of the property owned. The fundamental difference between open access and common property is that in an open access situation, every potential user has a privilege with respect to use of the resource since no one else has the legal ability to keep the person out. Therefore an open access situation is one of mutual privilege and no rights. In contrast, a common property regime is one in which there are rules defining who is in the resource management group and who is not. The tragedy of the commons in this resource ownership regime often results, not from any inherent failure of common property, but from institutional failure to control access to resources, and to make and enforce internal decisions for collective use. Institutional failure could be due to internal reasons, such as the inability of the users to manage themselves, or it could be due to external reasons, for example an incursion of outsiders

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 Pressure on the resource because of human population growth, technological change, or economic change, including new market opportunities, may contribute to the breakdown of communal-property mechanisms for exclusion The social and political characteristics of the users of the resource and how they relate to the larger political system affects the ability of local groups to organize and manage communal property

Implications of Common Property Resource Management Common property arrangements have many social and economic implications as follows: it has guaranteed the continuous supplies of natural resources that are essential for subsistence economy of rural people. it has constituted a mechanism of social control to protect common resource. Individual exploitation is kept in check and local resources are protected from destruction by individual beneficiaries. It is not only equitable but is based upon a number of considerations, such as family needs, communal responsibility, respect and welfare Under this common property arrangement, each individual family can meet their basic needs of timbers, fodders and fuelwoods without destroying or degenerating their resource bases.

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 Joint ownership provides checks and balances to prevent over harvestings by illegal means, such as stealing. It also provides incentives and motivates people to protect their forest resources Common property arrangement contributes directly to the profitability and sustainability of both agricultural and nonagricultural enterprises Poor management can have detrimental consequences for rural infrastructure of economic development and health Common property arrangement has policy implications as well. The diversified and differentiated property arrangements practiced by the local people have several positive effects in managing the use patterns- availability, distribution, and conflicts associated with forest and pasture resources and should be supported and strengthened rather than replaced with a monolithic or exclusively private system of ownership Local system of management should be identified and recognized by the policy makers and planners for the effective and equitable resource management Local systems of resource management are effective, enduring and productive They are locally preferred approaches and therefore they should be supported and strengthened.

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The Economic Debate over Private vs. Common Property common property institutions are viewed as having a longer history than private-property institutions Private property is considered by most economists to be an essential ingredient in economic development due to the incentives associated with diverse kinds of property relationships e.g. farmer who owns his own labor, land and other factor inputs, is likely to see a direct relationship between investments and the level of benefit achieved over the long term. A farmer who belongs to an agricultural production cooperative, on the other hand, may see only a loose connection between personal contributions and benefits. The more individuals in a society whose work is only loosely connected to their benefits, the more pervasive an attitude of free riding can become. If everyone tends to free ride on the work of others, overall economic productivity will be low. Private-property rights, however, cannot simply emerge spontaneously from a common property system. Private-property rights depend upon the existence and enforcement of a set of rules that define who has a right to undertake which activities on their own initiative and how the returns from that activity will be allocated In other words, rules and rulers are required to establish, monitor and enforce a property system.

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 While some rules generate incentives that greatly increase the welfare of most participants in an economy, there are always individuals who resist changes because of benefits they receive from a prior system or propose changes that particularly benefit themselves. Rulers may also receive substantial returns from making rules that benefit some to the detriment of others. Thus, rent-seeking behavior is expected on the part of both entrepreneurs and rulers.

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