ABSTRACT
This chapter begins by suggesting an economic justification for the existence of property rights, namely their incentive effects, and provides some illustrations of how property rights are often created informally if they are not recognized by law. It analyzes various forms of intellectual property, for example patents, copyrights, and trademarks, and how the law seeks to maximize the benefits of creative activity and work of good quality, relative to the costs of establishing these property rights. The chapter considers a principle of far-reaching importance that is known as the Coase Theorem, set forth in a 1960 paper by the Nobel Laureate Ronald Coase. It also considers the arguments for and against the government’s power of eminent domain, which has been defended on the grounds that it is necessary to overcome the holdout problem, a problem of monopoly.
