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. Finally, put-option liability rules are less efficient than call-option liability rules in property. Moreover, Rules 3 and 4 are mostly unnecessary concepts in the area of property.
In addition, this article contends that Calabresi & Melamed are actually correct in that in low transaction-cost setting, property rules are generally more efficient, because they harness private information. Built on this line of literature, this article argues that property rules are indeed more efficient in property law most of the time, and develops a theory as to when call-option liability rules are more efficient. As Carol Rose, Richard Epstein, and Henry Smith have pointed out, the shadow examples in this so-called optional law literature are not property laws, and they have contended that property rules should be the default in property law. Ian Ayres and his co-authors, as well as others such as Saul Levmore, develop two types of put-option liability rules and many sub-types. 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.
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