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Fall 2004

ISSN 0890-913X

Volume 20, Number 1

Categories: Fall 2004 | Private Enterprises

Economic Freedom, Property Rights, and the Informal Underground Economy

Charles R. Britton, University of Arkansas

Richard K. Ford, University of Arkansas at Little Rock

David E. R. Gay, University of Arkansas

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EconomicFreedom,PropertyRights,andtheInformalUndergroundEconomyCharlesR.BrittonUniversityofArkansasRichardK.FordUniversityofArkansasatLittleRockDavidE.R.GayUniversityofArkansasAYdifferentpropertyrightscreatetheirownspecificincentivesandtransactioncosts.Inturn,thoseincentivesandtransactioncostshavespecificandpredictableeffectsonhumanbehavior.@SvetozarPejovich(1995,65)PropertyrightsTheroleplayedbypropertyrightswasrecognizedbyAdamSmith(1776)althoughnotfullyintegratedintohisworks.Hetreatedpropertyrightsasiftheywereendogenouslydevelopedinresponsetochangesinvaluethatcouldbecapturedbybuyersandsellers.Thisisparticularlyillustratedintheevolutionoflandtenuresystems(Gay,1977).Hisapproachtopropertyrightswaswidelyseededinhiseconomics(1776)andinethics(Smith1763).PropertyrightsarecentraltoprovidingsignalsaboutopportunitiesforbuyersandsellerstoseekAgooddeals.@Inasystemofdecentralizedknowledge,theproperincentiveflowingfromprivatepropertyrightscompelparticipantstobeengaged.Theyarecompelledtobeengagedinthesearchforalternatives,creatingvalueandcapturingvalueinamarketsetting.AsAlchian(1988)observed,APrivatepropertyrightsareassignmentsofrightstochooseinescapablyincompatibleuses.@Thus,thebasiccoordinationandproductionaredirectedbythepursuitofself-loveAtopromoteanendthatwasnopartoftheiroriginalintention,@asSmith(1776)claimed.

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Metadata [hide]

Title	Economic Freedom, Property Rights, and the Informal Underground Economy
Authors/Creators:	Charles R. Britton, University of Arkansas Richard K. Ford, University of Arkansas at Little Rock David E. R. Gay, University of Arkansas
Year:	2004
Volume:	20
Number:	1
Pages:	86 - 99
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Economic freedom, Private ownership, Economic coordination, Trade, Government policy, Institutional economics, Black market, Economic development, Market economy

Citation:
Britton, Charles R.; Ford, Richard K.; R. Gay, David E. / 2004. "Economic Freedom, Property Rights, and the Informal Underground Economy." The Journal of Private Enterprise, 20(1): 86-99.