Chair in Economics

Transaction Costs

Speaking of property rights, what do “shovel-earned parking dibs and intellectual property law” have in common? One answer is that in each case the producer may not be able to capture the full value of its efforts.  Without some sort of protection (a chair, a patent) someone else can come along and “appropriate” the value of your efforts. As Professor Coase would say, the “externality” comes from the high transaction costs of enforcing property rights.

The Cheap Talk blog contemplates this issue and even poses this puzzler:

I wonder how many people who save parking spaces with chairs are also software/music pirates?

See also our post on Pittsburgh last year, where failure to observe the law of the chair met with met with swift justice.  Indeed, back in Pittsburgh, people tend to respect the chair whether one shoveled or just woke up early.