Document Type



This essay examines two aspects of “property rules” in the sense defined by Judge Guido Calabresi and Douglas Melamed. In each case, the form in which property rules are cast is critically important.

The first question addressed is the capacity of property rules to affect behavior prior to and outside litigation. Most economic analysis of property rules and liability rules assumes that the choice between them will guide decisionmaking at the time of a contemplated rights violation, and possibly prior to that time. To have this effect, property rules (and liability rules) must be established by determinate legal rules that define the entitlements to be protected, the conditions on which a property-rule remedy is available, and the extent of the sanction the remedy imposes on takers. They must, in other words, take the form of property rule rules.

In fact, “true property rules” that meet this description are scarce. This casts some doubt on the predictions made in literature on the subject. Theory and doctrine may or may not be reconcilable, depending on the desirability and feasibility of determinate rules in the area of remedies.

In existing law, most true property rules protect property rights. This leads to the second question addressed here: what relationship, if any, do property rules bear to property? After examining several theories others have proposed to explain the association between property rules and property rights, I suggest that property rules are connected to property in two ways. First, deterrent property rules ensure the continuity that makes property rights valuable to owners and to society. Second, once property rights are securely in place, the value they generate makes property rules a more efficient response to the possibility of unilateral taking. To achieve these results, however, both property rights and property rules must be implemented by general, determinate, and authoritative legal rules.

Date of Authorship for this Version

August 2007