ABSTRACT

This chapter examines the kinds of problems that arise when property rights are nonexistent or incomplete. It also examines why the law is surely justified in imposing some limits on the vertical dimension of property rights. The chapter considers the problem of the “dead hand,” that is the situations in which enforcing the conditions of the donor or testator long after her death would lead to an inefficient or illegal use of resources. It also considers the cases in which property is under common ownership. Social welfare would be maximized by maximizing the net social benefit, that is total social benefit minus total social cost. Under the common law the rights of life tenant and remainderman were governed by the law of waste, under which the life tenant was limited to a “reasonable” use of the property.