Find counter arguments by entering NameVs… or …VsName.
The author or concept searched is found in the following 4 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Institutions | Demsetz | Parisi I Institutions/law/legal history/Demsetz/Wangenheim: Initiated by Harold Demsetz's seminal paper (1967)(1), neo-institutional investigations of legal evolution typically look at specific changes of property rights regimes. Alchian: The basic idea is closely related to Alchian's (1950)(2) optimistic account of behavioral evolution: societies tend to have institutions that reflect, and are adapted to, the current needs of this society, given their environment and their preferences. Property rights/Demsetz: The Labrador Indians switched from open access property rights regimes to private property Parisi I 163 when fur trade made hunting beavers more valuable to each hunter, so that the natural setting could not sustain the radically increased burden resulting from consequentially increased hunting activities. Conditions/Demsetz: In his reappraising paper thirty-five years later, Demsetz (2002)(3) based his argument on a number of conditions that have to be satisfied to make environmental changes induce optimal institutional adaptations. In particular, he considered (1) the number and closeness of involved persons, (2) their productivity in solving resource allocation problems, and (3) the complexity of this problem as relevant conditions. If they change, most often due to new levels of specialization in production, observable property rights regimes will adapt to better solve the externality problems that become prevalent in effect, so Demsetz (2002)(4) argues. >Externalities. North: The idea of institutions evolving towards efficiency is also at the heart of the earlier writings of Douglas North (e.g. 1981)(4), who grounded his account of economic history on this argument. >Efficiency. WangenheimVsDemsetz: Independently of whether one wants to label this functionalist Demsetzian approach as truly evolutionary or not, the argument lacks any causal explanation for why the institutions change. There is no discussion of how rules in archaic societies are made, nor is there any hint of legislators' incentives when more complex societies are discussed (mainly in the 2002 paper). WittVsDemsetz: Many authors like Witt (1987)(5), Banner (2002)(6), Eggertson (1990(7), pp. 247—280), and Anderson and Hill (1975(8), 2002(9)) have noted this pitfall of Demsetz's approach. The idea has been taken up by scholars like Umbeck (1977a(10), 1977b(11)), Ellickson (1991(12), 1994(13)), and Anderson and Hill (1975(8), 2002(9)), who have argued that societies self-organize and develop property rights when law does not exist or is not enforced (prominent examples are farmer - rancher conflicts in Shasta County, mining claims during the California gold rush, Maine lobster fishing grounds, and grazing areas on the American Western frontier in the second half of the nineteenth century). Causality: (…) the authors proffer a causal complement to Demsetz's teleological hypothesis: they identify some individuals who find it privately worthwhile to design and enforce property rights against infringing group members or outsiders. VsUmbeck: Not all examples have remained undisputed. Clay and Wright (2005)(14), for example, challenge Umbeck's observations on mining district codes producing order. They argue that the mining district codes gave equal attention to the rights of claim-jumpers as to claim holders, whence chronic insecurity and litigation resulted. 1. Demsetz, H. (1967). "Toward a Theory of Property Rights." American Economic Review, P&P 57: 347-359. 2. Alchian, A. (1950). "Uncertainty, Evolution and Economic Theory." Journal of Political Economy 58: 211—221. 3.Demsetz, H. (2002). "Toward a Theory of Property Rights Il: The Competition Between Private and Collective Ownership." Journal of Legal studies 31: S653—S672. 4. North, D. C. (1981). Structure and Change in Economic History. New York: Norton. 5. Witt, U. (1987). "How Transaction Rights Are Shaped to Channel Innovativeness." Journal of Institutional and Theoretical Economics 143: 180—195. 6. Banner, S. (2002). "Transitions Between Property Regimes." Journal of Legal studies 31: S359-S371. 7. Eggertson, T. (1990). Economic Behavior and Institutions. Cambridge: Cambridge University Press. 8. Anderson, T. L. and P. J. Hill (1975). "The Evolution of Property Rights: A Study of the American West." Journal of Law and Economics 18: 163—179. 9. Anderson, T. L. and P. J. Hill (2002). "Cowboys and Contracts." Journal of Legal studies 31: S489-S514. 10. Umbeck, J. (1977a). "The California Gold Rush: A Study of Emerging Property Rights." Explorations in Economic History 14: 197—226. 11. Umbeck, J. (1977b). "A Theory of Contract Choice and the California Gold Rush." Journal of Law and Economics 20: 421—437. 12. Ellickson, R. (1991). Order Without Law: How Neighbors Settle Disputes. Cambridge, MA: Harvard University Press. 13. Ellickson, R. (1994). "The Aim of Order without Law." Journal of Institutional and Theoretical Economics 150: 97—100. 14. Clay, K. and G. Wright (2005). "Order without law? Property Rights during the California Gold Rush." Explorations in Economic History 42: 155—183. Wangenheim, Georg von. „Evolutionary Law and Economics.” In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press |
EconDems I Harold Demsetz Toward a theory of property rights 1967 Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
| Legal History | Demsetz | Parisi I Institutions/law/legal history/Demsetz/Wangenheim: Initiated by Harold Demsetz's seminal paper (1967)(1), neo-institutional investigations of legal evolution typically look at specific changes of property rights regimes. Alchian: The basic idea is closely related to Alchian's (1950)(2) optimistic account of behavioral evolution: societies tend to have institutions that reflect, and are adapted to, the current needs of this society, given their environment and their preferences. Property rights/Demsetz: The Labrador Indians switched from open access property rights regimes to private property Parisi I 163 when fur trade made hunting beavers more valuable to each hunter, so that the natural setting could not sustain the radically increased burden resulting from consequentially increased hunting activities. >Property. Conditions/Demsetz: In his reappraising paper thirty-five years later, Demsetz (2002)(3) based his argument on a number of conditions that have to be satisfied to make environmental changes induce optimal institutional adaptations. In particular, he considered (1) the number and closeness of involved persons, (2) their productivity in solving resource allocation problems, and (3) the complexity of this problem as relevant conditions. If they change, most often due to new levels of specialization in production, observable property rights regimes will adapt to better solve the externality problems that become prevalent in effect, so Demsetz (2002)(4) argues. >Externalities. North: The idea of institutions evolving towards efficiency is also at the heart of the earlier writings of Douglas North (e.g. 1981)(4), who grounded his account of economic history on this argument. >Institutions. WangenheimVsDemsetz: Independently of whether one wants to label this functionalist Demsetzian approach as truly evolutionary or not, the argument lacks any causal explanation for why the institutions change. There is no discussion of how rules in archaic societies are made, nor is there any hint of legislators' incentives when more complex societies are discussed (mainly in the 2002 paper). WittVsDemsetz: Many authors like Witt (1987)(5), Banner (2002)(6), Eggertson (1990(7), pp. 247—280), and Anderson and Hill (1975(8), 2002(9)) have noted this pitfall of Demsetz's approach. The idea has been taken up by scholars like Umbeck (1977a(10), 1977b(11)), Ellickson (1991(12), 1994(13)), and Anderson and Hill (1975(8), 2002(9)), who have argued that societies self-organize and develop property rights when law does not exist or is not enforced (prominent examples are farmer - rancher conflicts in Shasta County, mining claims during the California gold rush, Maine lobster fishing grounds, and grazing areas on the American Western frontier in the second half of the nineteenth century). Causality: (…) the authors proffer a causal complement to Demsetz's teleological hypothesis: they identify some individuals who find it privately worthwhile to design and enforce property rights against infringing group members or outsiders. VsUmbeck: Not all examples have remained undisputed. Clay and Wright (2005)(14), for example, challenge Umbeck's observations on mining district codes producing order. They argue that the mining district codes gave equal attention to the rights of claim-jumpers as to claim holders, whence chronic insecurity and litigation resulted. 1. Demsetz, H. (1967). "Toward a Theory of Property Rights." American Economic Review, P&P 57: 347-359. 2. Alchian, A. (1950). "Uncertainty, Evolution and Economic Theory." Journal of Political Economy 58: 211—221. 3.Demsetz, H. (2002). "Toward a Theory of Property Rights Il: The Competition Between Private and Collective Ownership." Journal of Legal studies 31: S653—S672. 4. North, D. C. (1981). Structure and Change in Economic History. New York: Norton. 5. Witt, U. (1987). "How Transaction Rights Are Shaped to Channel Innovativeness." Journal of Institutional and Theoretical Economics 143: 180—195. 6. Banner, S. (2002). "Transitions Between Property Regimes." Journal of Legal studies 31: S359-S371. 7. Eggertson, T. (1990). Economic Behavior and Institutions. Cambridge: Cambridge University Press. 8. Anderson, T. L. and P. J. Hill (1975). "The Evolution of Property Rights: A Study of the American West." Journal of Law and Economics 18: 163—179. 9. Anderson, T. L. and P. J. Hill (2002). "Cowboys and Contracts." Journal of Legal studies 31: S489-S514. 10. Umbeck, J. (1977a). "The California Gold Rush: A Study of Emerging Property Rights." Explorations in Economic History 14: 197—226. 11. Umbeck, J. (1977b). "A Theory of Contract Choice and the California Gold Rush." Journal of Law and Economics 20: 421—437. 12. Ellickson, R. (1991). Order Without Law: How Neighbors Settle Disputes. Cambridge, MA: Harvard University Press. 13. Ellickson, R. (1994). "The Aim of Order without Law." Journal of Institutional and Theoretical Economics 150: 97—100. 14. Clay, K. and G. Wright (2005). "Order without law? Property Rights during the California Gold Rush." Explorations in Economic History 42: 155—183. Wangenheim, Georg von. „Evolutionary Law and Economics.” In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press |
EconDems I Harold Demsetz Toward a theory of property rights 1967 Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
| Moral Hazard | Arrow | Henderson I 56 Moral hazard/Arrow/Demsetz/DemsetzVsArrow/Henderson/Globerman: Moral hazard, a term from insurance, refers to the fact that when people are insured against a bad outcome, they make less effort than otherwise to avoid that bad outcome. When moral hazard arises in insurance markets, argued Arrow(1), insurance is "incomplete." Certain things are left uninsured. Demsetz didn't challenge the fact of moral hazard - it is a well-known problem. What he pointed out, though, is that moral hazard is a cost of providing insurance and therefore should be treated like any other cost. Moral hazard/Demsetz: Moral hazard, he wrote, "is not different from the cost that arises from the tendency of men to shirk when their employer is not watching them" (1969(2): 7). He also compared the moral hazard problem to the problem posed by the cost of mining iron ore: Some iron ore is left unearthed because it is too costly to bring to the surface. But we do not claim ore mining is ineffcient merely because mining is not "complete." Some risks are left uninsured because the cost of moral hazard is too great and this may mean that self-insurance is economic. DemsetzVsArrow: Arrow has fallen prey once again to the "free lunch fallacy." >Nirvana fallacy/Demsetz, >Free lunch/Demsetz. Henderson I 57 ArrowVsDemsetz/Henderson: Of course, Arrow could point correctly to the fact that if insurance did not tempt people to 9underinvest in care, there would not be a problem. DemsetzVsArrow: But then, noted Demsetz, Arrow's reasoning would be committing the "people could be different fallacy." >Free Market/Demsetz. 1. Arrow, Kenneth (1962). Economic Welfare and the Allocation of Resources for Innovation. In The Rate and Direction of Inventive Activity: Economic and Social Factors, National Bureau Committee for Economic Research (Princeton University Press). 2. Demsetz, Harold (1969). Information and Efficiency: Another Viewpoint. Journal of Law and Economics 12, 1 (April): 1-22. |
EconArrow I Kenneth J. Arrow Social Choice and Individual Values: Third Edition New Haven 2012 Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019 |
| Shareholders | Demsetz | Henderson I 25 Shareholders/incentives/Demsetz/Henderson/Globerman: Shareholders are the property right owners inasmuch as they bear the financial consequences of the decisions made by managers. Therefore, shareholders have an incentive to hire managers who have the specialized knowledge needed to operate the business effciently. Henderson I 26 Problem: However, shareholders face relatively high costs of monitoring the actions of the managers who run the company, especially when the knowledge needed to run the company is specialized. Solution: One way to reduce the need for close monitoring of managers is for shareholders to transfer some of their ownership rights to managers. Incentives/Demsetz: Demsetz (1983)(1) noted that one way to align the incentives of managers with the interests of shareholders is to grant stock options to managers or to pay them partly with shares in the company. In this way, managers are made more responsive to the interests of shareholders. Long run/short run/VsDemsetz: Critics have argued that rewarding managers with claims to partial ownership of the companies they manage, through stock options, creates incentives for managers to make decisions that increase the short-run profits of those companies at the expense oflong-run profits, since the latter might well be realized after current management is no longer employed. Short run: This argument assumes that stock markets overvalue short-run profits and undervalue long-run expected profits, a belief for which there is little justification. This view of the ineffciency of stock markets has led many politicians and would-be advocates of "improved" corporate governance to call for limiting or even eliminating the use of stock options as a means to compensate managers. DemsetzVsVs: (…) Demsetz replied that owners have an incentive to make an effcient tradeoff between doing more active monitoring of managers hired to run the businesses they own and tying management compensation more closely to performance outcomes preferred by the shareholders. Regulation: Regulatory limits on stock options or other forms of managerial compensation tied to corporate profitability would require owners to do more indirect managing, which would limit the specialization of roles between owners and managers. The net outcome would likely be fewer effcient and profitable companies and greater diffculty in raising financial capital to fund start-ups and help small- and medium-sized companies grow. >Long run/short run. 1. Demsetz, Harold (1983). The Structure of Ownership and the Theory of the Firm. Journal of Law & Economics 26, 2: 375-390. |
EconDems I Harold Demsetz Toward a theory of property rights 1967 Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019 |
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