<p>In narrow sense of the word the article was definitely peer reviewed as it was published  in Journal of Legal Analysis. But in this narrow sense it was most likely peer reviewed by jurists not economists.</p>
<p>In a broader sense of the word there are economists who had a look at the claims as well. For example, review of their book by <a href="https://www.aeaweb.org/articles?id=10.1257/jel.20191533" rel="nofollow noreferrer">Levine (2020)</a> in Journal of Economic literature (one of the <a href="https://www.scimagojr.com/journalsearch.php?q=27165&amp;tip=sid&amp;clean=0" rel="nofollow noreferrer">top ranking</a> journals), examines their claims about monopolies and also other claims and policy proposals made in the book. The review is not very warm to the ideas of Posner and Weyl. Regarding the idea of property rights causing widespread monopoly power and misallocation Levine writes [emphasis mine]:</p>
<blockquote>
<p>The chapter begins with a clear and careful description of the hold-up problem.
Here, indeed, monopoly power is a problem.
It then goes on to suggest that the hold-up
problem is ubiquitous in ownership of property—that all property is monopoly and that
the resulting misallocation might be on the
order of 25 percent of income. <strong>Here as elsewhere the book is not strong on data. There
is extensive research indicating that in some
places at some times, misallocation is a problem possibly of this order of magnitude.
Typically this research does not attribute
misallocation to a problem with private property—generally the reverse.</strong></p>
</blockquote>
<blockquote>
<p>... Nevertheless the economics
profession does not generally view hold-up and private information problems as ubiquitous nor externalities as insoluble. <strong>In many
markets, ample substitutes are available—
for example in the housing market—so that
monopoly power is not important.</strong> In some
cases the market solves the hold-up problem relatively well—through tender offers
and other ways of packaging properties.</p>
</blockquote>
<blockquote>
<p>Pushing on: the authors argue that the
problem with the ubiquitous monopolies
created by private property can be solved by
a self-assessment wealth tax with mandatory
sale at the self-assessed price. Self-assessment
with a commitment to sell at that price is
a useful and credible solution to problems
involving assets for which there is substantial
private information. This has been a particular problem for commercial real estate and
for privately held businesses, where often
artificially low transfer prices are used to
avoid taxes. As the authors correctly say, top
researchers such as Harberger (1965) and
Cramton, Gibbons, and Klemperer (1987)
have argued for self-assessment in these
types of circumstances.
<strong>It is not immediately clear why a proposal
for solving a particular private information
problem should be viewed as a broad solution to a problem of ubiquitous monopoly...</strong></p>
</blockquote>
<p>There is more critique on this in the paper. To give you a wrap up (as mentioned in the comments under your other question), the problem with Posner and Weyl is not that their analysis would be inaccurate in <strong>some specific cases</strong>. Rather they try to generalize well understood result that holds in some very specific circumstances onto property rights in general.</p>
<p>There is quite large consensus in literature that property rights do not generally lead to monopoly or even market power (see Belleflamme &amp; Peitz Industrial organization: markets and strategies for overview of many models where even monopoly does not guarantee market power and models of competition where property rights are implicit but firms have no market power). In fact as Mankiw put it in his Principles of Economics, economists view property rights as &quot;an important prerequisite for the price system to work&quot;.</p>
<p>Furthermore, Acemoglu and Robinson (top developmental economists) in their magnum opus Why Nations Fail, go even so far as to state:</p>
<blockquote>
<p>To be inclusive, economic institutions must feature secure private property...</p>
</blockquote>
<p>Acemoglu and Robinson go further on proving that sustainable growth and economic development without inclusive institutions (including property rights) is virtually impossible.</p>
<p>Additionally, this work is apparently even criticized in law profession itself <a href="https://lawreview.uchicago.edu/sites/lawreview.uchicago.edu/files/10Wyman_WEB_FINAL.pdf" rel="nofollow noreferrer">(see Wyman, K. M.; 2019)</a>, but as I am not a law professional I will have no further comments on that (it just seemed relevant to point that out).</p>
<p>Hence given the above I think it is fair to say that the claims of Posner and Weyl are not received positively by economics profession, to put it very generously.</p>

CC BY-SA 4.0
2020-11-16T06:31:24.080Z
Levine says that "ample substitutes are available [...] in the housing market—so that monopoly power is not important". Where does this leave land rent then? A rent-free plot on the edge of civilisation is not a substitute for a plot in the centre of the city for which the owner can ask far more than "the costs needed to bring that factor into production".
sba222
CC BY-SA 4.0
2020-11-16T09:01:47.320Z
@Steve222 as mentioned in this answer in some specific cases such analysis is correct. You can find some examples when it would work. Problem is that Posner and Weyl claim that property rights will virtually always lead into monopoly power and create misallocation whereas as mentioned in the excerpts from the paper evidence and literature suggests most of the time it is lack of property rights that leads to misallocations and holdout problems are only important in some specific cases
1muflon1
CC BY-SA 4.0
2020-11-16T09:41:50.530Z
I can see that for most goods an owner’s self-assessed value would correspond to the cost of replicating the good in a competitive market (i.e. no monopoly). But a competitor cannot replicate a plot of land in the centre of a city. How does property in land _not_ lead to monopoly? What else is land rent then? (Perhaps that should be a separate question?)
sba222
CC BY-SA 4.0
2020-11-16T09:46:14.690Z
@Steve222 because city consists of a multiple plot of lands. A plot of land on 140 Street is substitute for plot of land on 141 Street. You would get perfect monopoly rents from property only in case the 140 plot is so unique that it really has no competition. Of course then you have some in between cases. The problem with P&W is they significantly overstate the issue. There is no evidence this would be economy wide problem - sure in some cities at some places the holdout problem is significant enough to warrant gov intervention (but this is not what P&W claim)
1muflon1
CC BY-SA 4.0
2020-11-16T09:50:18.583Z
@Steve222 I will give you an analogy. For example, economic profession accepts that government is necessary for provision of public goods (as narrowly defined in economics). But now imagine someone publishes book saying I think every good is a public good and since this valid economic research shows that public goods need to be provided by government we need to eliminate all private sector and have total gov. ownership. The fallacy of that statement is that it takes a result that is valid for a subset of goods for which claim is true and then changes definition of every good to public good
1muflon1
CC BY-SA 4.0
2020-11-16T09:54:57.683Z
Yes point taken about goods in general. I will ask about land in a new question.
sba222
CC BY-SA 4.0
2020-11-16T09:55:08.963Z
@Steve222 regarding the land rent portion of it is compensation for maintaining the land (this is not an economic rent - but all return to land is called rent (since most of it coincides with economic definition of rent), portion of it is just windfall profit due to the fact that supply of land is fixed - this would be also economic rent (not the same as monopoly rent). Next if some land has no close substitutes then there will also be monopoly rent. You can also ask it as a separate question, but maybe first also try to do search on these key words
1muflon1
CC BY-SA 4.0
2020-11-16T18:58:43.733Z
@1muflon1 surely this is false, for the government should never ever intervene on anything at all
Criticize SE actions means ban
CC BY-SA 4.0
2020-11-16T19:00:15.647Z
@user253751 what exactly you mean by this? The critique in the answer above holds- but nothing there precludes government intervention so I am bit confused now.
1muflon1
CC BY-SA 4.0
2020-11-16T19:02:21.247Z
@1muflon1 I mean have you considered that governments are literally pure evil? Some politicians told me so, so it's true.
Criticize SE actions means ban
CC BY-SA 4.0
2020-11-16T19:03:27.423Z
@user253751 I dont know how to respond to that surely you are just jesting now
1muflon1
CC BY-SA 4.0
2020-11-16T19:04:37.350Z
@1muflon1 you seem to be against government intervention in general.
Criticize SE actions means ban
CC BY-SA 4.0
2020-11-16T19:07:21.470Z
@user253751 where did you get that idea? I am for government intervention wherever it is efficient for government to intervene. One of my MSc is in public economics - not a major that people who are against government intervention choose to pursue given that the whole field of study is about how government should intervene. For example, I am for provision of public goods, I am enthusiastic about macro management (in fact most of my work is on monetary/fiscal policy). I am all for government redistribution - I do not mind even governments with fully Rawlsian redistributive preferences...
1muflon1
CC BY-SA 4.0
2020-11-16T19:11:55.713Z
@user253751 also in real life my whole career was either in academia or working for government. When I was working for gov it was often on models that help improve government ability to do macroeconomic management - given that is what I focus on, and I also worked as RA on evaluation of some smaller interventions - again not projects where you find anarchist lining up. I would say that my appetite for gov intervention is quite aligned with current mainstream which is considerable but not ubiquitous. Also I dont see how would anything I ever said suggest I am against gov intervention in general
1muflon1
CC BY-SA 4.0
2020-11-15T21:30:22.127Z
2020-11-15T21:38:16.863Z
2020-11-15T21:38:16.863Z
1muflon1
<p>Posner &amp; Weyl claim that property rights lead to monopoly rents:<br />
<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2818494" rel="noreferrer">Property Is Only Another Name for Monopoly</a><br />
<a href="http://radicalmarkets.com/" rel="noreferrer">Radical Markets</a></p>
<p>Have their claims been elaborated, tested, or peer-reviewed?</p>
<p>In situations with assets with unique attributes that cannot be substituted (e.g. a plot on a high street) this seems to be intuitive. An owner cannot be compelled to subject her property to market competition but she can hold out for a higher price than she values the property at. This generates an economic rent resulting from her market power over the plot of land in question. The claim seems to be less obvious where assets can be easily replicated (e.g. a pint of milk). That would imply that property rights may only lead to monopoly rents where they grant property over assets that generate monopoly rents (e.g. land).</p>

<markets><monopoly><competition>
What has been the reception of Posner & Weyl’s claim that property rights lead to market power?
sba222
# What has been the reception of Posner & Weyl’s claim that property rights lead to market power?

(Asked by: username_0 on 2020-11-15)

Posner & Weyl claim that property rights lead to monopoly rents:  
[Property Is Only Another Name for Monopoly](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2818494)  
[Radical Markets](http://radicalmarkets.com/)

Have their claims been elaborated, tested, or peer-reviewed?

In situations with assets with unique attributes that cannot be substituted (e.g. a plot on a high street) this seems to be intuitive. An owner cannot be compelled to subject her property to market competition but she can hold out for a higher price than she values the property at. This generates an economic rent resulting from her market power over the plot of land in question. The claim seems to be less obvious where assets can be easily replicated (e.g. a pint of milk). That would imply that property rights may only lead to monopoly rents where they grant property over assets that generate monopoly rents (e.g. land).

**Tags:** markets, monopoly, competition


---

## 1 answers

### Answer by username_1 on 2020-11-15. Score: 4 | Accepted answer

In narrow sense of the word the article was definitely peer reviewed as it was published in Journal of Legal Analysis. But in this narrow sense it was most likely peer reviewed by jurists not economists.

In a broader sense of the word there are economists who had a look at the claims as well. For example, review of their book by [Levine (2020)](https://www.aeaweb.org/articles?id=10.1257/jel.20191533) in Journal of Economic literature (one of the [top ranking](https://www.scimagojr.com/journalsearch.php?q=27165&tip=sid&clean=0) journals), examines their claims about monopolies and also other claims and policy proposals made in the book. The review is not very warm to the ideas of Posner and Weyl. Regarding the idea of property rights causing widespread monopoly power and misallocation Levine writes [emphasis mine]:

> The chapter begins with a clear and careful description of the hold-up problem.
> Here, indeed, monopoly power is a problem.
> It then goes on to suggest that the hold-up
> problem is ubiquitous in ownership of property—that all property is monopoly and that
> the resulting misallocation might be on the
> order of 25 percent of income. **Here as elsewhere the book is not strong on data. There
> is extensive research indicating that in some
> places at some times, misallocation is a problem possibly of this order of magnitude.
> Typically this research does not attribute
> misallocation to a problem with private property—generally the reverse.**

> ... Nevertheless the economics
> profession does not generally view hold-up and private information problems as ubiquitous nor externalities as insoluble. **In many
> markets, ample substitutes are available—
> for example in the housing market—so that
> monopoly power is not important.** In some
> cases the market solves the hold-up problem relatively well—through tender offers
> and other ways of packaging properties.

> Pushing on: the authors argue that the
> problem with the ubiquitous monopolies
> created by private property can be solved by
> a self-assessment wealth tax with mandatory
> sale at the self-assessed price. Self-assessment
> with a commitment to sell at that price is
> a useful and credible solution to problems
> involving assets for which there is substantial
> private information. This has been a particular problem for commercial real estate and
> for privately held businesses, where often
> artificially low transfer prices are used to
> avoid taxes. As the authors correctly say, top
> researchers such as Harberger (1965) and
> Cramton, Gibbons, and Klemperer (1987)
> have argued for self-assessment in these
> types of circumstances.
> **It is not immediately clear why a proposal
> for solving a particular private information
> problem should be viewed as a broad solution to a problem of ubiquitous monopoly...**

There is more critique on this in the paper. To give you a wrap up (as mentioned in the comments under your other question), the problem with Posner and Weyl is not that their analysis would be inaccurate in **some specific cases**. Rather they try to generalize well understood result that holds in some very specific circumstances onto property rights in general.

There is quite large consensus in literature that property rights do not generally lead to monopoly or even market power (see Belleflamme & Peitz Industrial organization: markets and strategies for overview of many models where even monopoly does not guarantee market power and models of competition where property rights are implicit but firms have no market power). In fact as Mankiw put it in his Principles of Economics, economists view property rights as "an important prerequisite for the price system to work".

Furthermore, Acemoglu and Robinson (top developmental economists) in their magnum opus Why Nations Fail, go even so far as to state:

> To be inclusive, economic institutions must feature secure private property...

Acemoglu and Robinson go further on proving that sustainable growth and economic development without inclusive institutions (including property rights) is virtually impossible.

Additionally, this work is apparently even criticized in law profession itself [(see Wyman, K. M.; 2019)](https://lawreview.uchicago.edu/sites/lawreview.uchicago.edu/files/10Wyman_WEB_FINAL.pdf), but as I am not a law professional I will have no further comments on that (it just seemed relevant to point that out).

Hence given the above I think it is fair to say that the claims of Posner and Weyl are not received positively by economics profession, to put it very generously.

> **Comments:**
> **username_0**: Levine says that "ample substitutes are available [...] in the housing market—so that monopoly power is not important". Where does this leave land rent then? A rent-free plot on the edge of civilisation is not a substitute for a plot in the centre of the city for which the owner can ask far more than "the costs needed to bring that factor into production".  
> **username_1**: @Steve222 as mentioned in this answer in some specific cases such analysis is correct. You can find some examples when it would work. Problem is that Posner and Weyl claim that property rights will virtually always lead into monopoly power and create misallocation whereas as mentioned in the excerpts from the paper evidence and literature suggests most of the time it is lack of property rights that leads to misallocations and holdout problems are only important in some specific cases  
> **username_0**: I can see that for most goods an owner’s self-assessed value would correspond to the cost of replicating the good in a competitive market (i.e. no monopoly). But a competitor cannot replicate a plot of land in the centre of a city. How does property in land _not_ lead to monopoly? What else is land rent then? (Perhaps that should be a separate question?)  
> **username_1**: @Steve222 because city consists of a multiple plot of lands. A plot of land on 140 Street is substitute for plot of land on 141 Street. You would get perfect monopoly rents from property only in case the 140 plot is so unique that it really has no competition. Of course then you have some in between cases. The problem with P&W is they significantly overstate the issue. There is no evidence this would be economy wide problem - sure in some cities at some places the holdout problem is significant enough to warrant gov intervention (but this is not what P&W claim)  
> **username_1**: @Steve222 I will give you an analogy. For example, economic profession accepts that government is necessary for provision of public goods (as narrowly defined in economics). But now imagine someone publishes book saying I think every good is a public good and since this valid economic research shows that public goods need to be provided by government we need to eliminate all private sector and have total gov. ownership. The fallacy of that statement is that it takes a result that is valid for a subset of goods for which claim is true and then changes definition of every good to public good  
> **username_0**: Yes point taken about goods in general. I will ask about land in a new question.  
> **username_1**: @Steve222 regarding the land rent portion of it is compensation for maintaining the land (this is not an economic rent - but all return to land is called rent (since most of it coincides with economic definition of rent), portion of it is just windfall profit due to the fact that supply of land is fixed - this would be also economic rent (not the same as monopoly rent). Next if some land has no close substitutes then there will also be monopoly rent. You can also ask it as a separate question, but maybe first also try to do search on these key words  
> **username_2**: @username_1 surely this is false, for the government should never ever intervene on anything at all  
> **username_1**: @user253751 what exactly you mean by this? The critique in the answer above holds- but nothing there precludes government intervention so I am bit confused now.  
> **username_2**: @username_1 I mean have you considered that governments are literally pure evil? Some politicians told me so, so it's true.  
> **username_1**: @user253751 I dont know how to respond to that surely you are just jesting now  
> **username_2**: @username_1 you seem to be against government intervention in general.  
> **username_1**: @user253751 where did you get that idea? I am for government intervention wherever it is efficient for government to intervene. One of my MSc is in public economics - not a major that people who are against government intervention choose to pursue given that the whole field of study is about how government should intervene. For example, I am for provision of public goods, I am enthusiastic about macro management (in fact most of my work is on monetary/fiscal policy). I am all for government redistribution - I do not mind even governments with fully Rawlsian redistributive preferences...  
> **username_1**: @user253751 also in real life my whole career was either in academia or working for government. When I was working for gov it was often on models that help improve government ability to do macroeconomic management - given that is what I focus on, and I also worked as RA on evaluation of some smaller interventions - again not projects where you find anarchist lining up. I would say that my appetite for gov intervention is quite aligned with current mainstream which is considerable but not ubiquitous. Also I dont see how would anything I ever said suggest I am against gov intervention in general  

---

