You gotta fight for your right? Publicly assigned but privately enforced property rights

Abstract

Establishment and enforcement of property rights is often seen as a key tenet of a productive society. Many argue that the absence of formal public institutions to establish and enforce property rights necessarily leads to conflict and violent private enforcement of property rights. By re-examining the decision problem of the “early entrants” into the property market, we argue that the mitigation of violent conflict begins when the property is first claimed though the claimants’ anticipation of the likelihood that their ownership will be challenged in the future. We perform a large-scale empirical test of the implications of this model (and of similar papers) by looking at the effect of the Homestead Acts—an exogenous increase in publicly assigned, but privately enforced, property rights—on the occurrence of violence on the American frontier. Exploiting variations in the assignment of homestead grants across states and time, we find that increases in homestead claims cause a statistically significant but economically insignificant increase in homicides. We conclude that there is no evidence that the assignment of privately enforced property rights meaningfully increases violence, and that settlers of the American West, as a whole, behaved in a manner consistent with rational conflict avoidance.