Fragmented Rights in the Commons and Anticommons: Externalities as a Function of Transaction Costs

Abstract

Economists often envision commons and anticommons as occurring from either too few or too many rights-claimants over a good. While this perspective has an intuitive appeal, it obfuscates similarities between commons and anticommons, with significant impact on proposed policy solutions. This paper argues for a two-dimensional approach to commons and anticommons aimed at modeling the role of transaction costs. It is possible for rights to usage, rights to exclusion, or both types of rights to exhibit fragmentation of ownership. Fragmented rights along two different dimensions add to transaction costs multiplicatively. This perspective suggests that solving commons and anticommons requires more than just adding rights or taking them away. Instead, the ownership structure of rights can have as much importance as their allocation or specific content.