Many of the follow-up articles argue that Calabresi & Melamed are wrong in arguing that property rules are more efficient when transaction costs are low. We should be able to have a lively discussion.] Abstract Since Calabresi & Melamed's seminal article on property rules and liability rules, a lot of law and economic articles have been debated on the efficiency of these two rules. This draft, however, is self-contained and includes many provocative claims. Note to Chicago Summer Scholars: this draft is obviously incomplete, so please do not quote without my permission. The results from this case study also may generalize to other development settings where metes and bounds dominate It seems likely that the comparative limitations of MB contributed to long-term effects on production and land values. The results indicate that topography influences parcel shape and size under a MB system that parcel shapes are aligned under the RS and that the RS is associated with higher land values, more roads, more land transactions, and fewer legal disputes than MB, all else equal. census manuscripts, court opinions, and state reports on infrastructure, legal disputes, and productivity. Our empirical analysis focuses on a 22-county area of Ohio where MB is used relative to the remaining 66 counties that employ RS. The rectangular survey is likely to lead to more market transactions, fewer conflicts, greater property investment, higher land values, and more infrastructure than metes and bounds. We then consider how a centralized system generates different ownership patterns and incentives for land use, land markets, investment, and border disputes. We begin by considering how a decentralized system of land claiming would generate patterns of land holdings that would be unsystematic and depend on natural topography and the characteristics of the claimant population. We develop an economic framework for examining land demarcation systems, focusing on a comparative analysis of RS and MB. Widespread use followed the Northwest Land Ordinance of 1785 that divided federal government frontier lands into square-mile 'sections' that were further divided into smaller uniform allotments for individual claiming or purchase. The RS outlines boundaries in terms of a centrally-controlled grid of square plots. they are found in the original 13 states, Kentucky, and Tennessee, as well as in the Spanish and Mexican land grants in the Southwest. The former results in a uniform grid of rectangular surveys (RS), whereas the latter results in haphazard localized bounding of properties, referred to as metes and bounds (MB). We examine the pattern of property rights demarcation in centralized and indiscriminate land survey systems and their economic effects. We illustrate some empirical findings from an analysis of metes and bounds in the Virginia Military District of Ohio. We then show how a centralized, rectangular system generates different ownership patterns and incentives for land use, land markets, investment, and border disputes. We consider how a decentralized system of land claiming would generate patterns of land holdings that would be unsystematic and depend on natural topography and the characteristics of the claimant population. We also show rectangular systems have been adopted in parts of Canada and Australia and cities in other parts of the world. as well as in commercial urban subdivisions. and describe how a centralized rectangular system became dominant in large parts of the U.S. We examine the various patterns of demarcation used in the U.S. We focus on metes and bounds and rectangular systems - the two dominate land demarcation methods. In this chapter we develop an economic framework for examining systems of land demarcation and examine the economic history of demarcation in the United States and beyond. Land demarcation systems are ancient human artifacts and are fundamental to property law and property markets.
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