The Authority Of Government Changes With The System Of Property Rights

"State paradox" is a famous proposition in new institution economics, which is mentioned by North. It means that State maybe the resource of growth, and maybe a block to growth. Weingast advanced the "essential political paradox", too. Many literatures tried to explain the problem. North's argument is that the governors pursue themselves interest, when their interest is conflict with public welfare, they would choose one kind of property rights systerm which may benefit to themselves but harm the efficiency. Olson considered that when rulers' interests and public interests are encompassing interests, the institution would be efficient. But the interpretations can't answer the question: when all the rulers in all countries pursue their interests, why did the rulers choose different property rights systerm with varied efficiency? When government choosed the targeting institution, what were the restrictions? This paper try to study governments' power structure is how to restrict the rulers' selection, political power's distribution is the key factor.This paper includes six parts. First part is introduction. In this part, it explains the study's value in practice and theory. In addition to this, it defines objects that will be studied and introduces the preconditions and methodology that will be used.Chapter 2 is the literature reviews, its subject is to give general interpretation on the relations between government and property rights. North advanced the theory of states potential violence on the state's nature. It depends on the distribution of the violence and the power. If government's power is restricted, it will be legal, otherwise, it will be "bandit". Government's role is twofold in the process of defining property rights. The reasons of government intervening the property rights enforcement mechanism are to get more efficient. In fact, it also produces negative effect. The present literatures analysed the negative role of governments in forming the property rights system. There are two mechanisms which governments impede efficient property rights. One is the government as an interest group, the contrast of different groups' political power and the Coaseian bargaining between groups decide the direction and the path of institution change. The other is because of the rent-seeking and state capture, they compose the obstructs to the property rights evolvement and securement.Chapter 3 is the expand on the relation between government and property rights in the theory. It expounds that the nature of governments and the distribution of the power decide the degree of efficiency. According to Coase theorem, if property rights are well-defined and there no transaction costs, economic agents will contract to achieve an efficient outcome. Under ideal conditions, government can achieve same outcome. Government and market are substitutable framework. The limitation of Coase theorem is the absence of the wealth effect. Institution arrangement by government may overcome the flaw of markets. But this will product new problem. Because of the imperfect information, contradicts on interests, the nature of the government, there exists government failure. Political Coase theorem is the category of Coase theorem, if political market is perfect and no transaction costs, varied initial...