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Property rights, the conditions for enterprise and economic growthProperty rights, the conditions for enterprise and economic growth

The aim of the project is to analyze the relationship between property rights, the conditions for enterprise, and economic growth. Special and unique emphasis is put on the intermediate variable, the conditions for enterprise, on how property rights affect firms and how this translates into effects on aggregate economic performance. The project is funded by the Marcus and Amalia Wallenberg Memorial Fund Foundation.

More specifically, a company is a legal person that may hold assets and enter into contracts, just like a private person. Behind the legal person are people of flesh and blood, whose behaviour is affected by the rules that determine the limits and conditions of the use of company assets. The limits and conditions of the use of assets of various kinds is exactly what property rights express. How property rights are designed can therefore be assumed to be of great importance for both companies and individuals as well as for society as a whole. The purpose of this project is to highlight how the design of property rights affects companies and entrepreneurship and, by extension, economic growth and development.

Economic institutions like property rights are primarily important in that they enable a dynamic market process and in that they affect the incentives of individuals and companies. Nowadays, not many question private ownership on a general level, but there are plenty of particular ways proposed to change the rules that define it. Familiar examples include restrictions on differentiated vote shares, restrictions on the usage of bonuses and gender quotas for company boards. Moreover, restrictions on private property rights may involve issues such as: Should capital flow freely within and between countries? Should an employer be free to make agreements with employees on the working conditions? Should a shopkeeper be free to choose the opening hours? Should a person who introduces new innovations, under high risk, be allowed to keep most of the possible profit? These are important normative issues that need to be discussed and settled in public discourse on the basis of scientific research on the effects of various ways of designing property rights.

For more information, contact Niclas Berggren.