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In: Operations Management

(a) Explain why property rights are best understood as a "Bundle of Sticks." (b) Provide and...

(a) Explain why property rights are best understood as a "Bundle of Sticks." (b) Provide and explain three examples. (4 points) At least one paragraph.Please use and cite sources.

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Expert Solution

a) In first year law course of US, the entity property is explained as a “bundle of sticks”. Bundle of sticks represent the bundle of different kinds of entitlements regulating the property law. The analogy is with bundle of sticks- where each stick represents a right or an entitlement. Full ownership of a property cant be established easily. It has to deal with the rights and entitlements of multiple stakeholders. Hence, property ownership is a bundle of complexities, a bundle of rights and entitlements or metaphorically “a bundle of sticks”.

b) Bundle of rights includes the right of use or control, possession, benefit, disposition, exclusion or enjoyment.

  • The right of use or control: Individual has an inherent right of use or control on an entity that he owns. Example: I have a scissor that I own. I have the right to use it for cutting paper, cutting vegetables or cutting clothes. Legally there is a restriction on this right that my right of use should not harm anyone or violate any law.
  • The right of benefit: This right is applicable inherently to the entities an individual possesses. If I am a stockholder of a company, I have the right of benefit from that company. The legal restriction on this right is through the taxes levied on the same by Government.
  • The right of destruction: An individual has the sole right of destruction on the things he owns and possesses. For example: If I have a vase with a crack, I can destroy it conveniently. The right of destruction is legal till the time the destruction is not causing any type of social harm.

http://www.bu.edu/law/workingpapers-archive/documents/dirobilanta061814.pdf

https://thugout.wordpress.com/2009/09/23/property-rights-as-a-bundle-of-sticks/


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