De Facto and De Jure Property Rights : Land Settlement and Land Conflict on the Australian , Brazilian

We present a conceptual framework to better understand the interaction between settlement and the emergence of de facto property rights on frontiers prior to governments establishing and enforcing de jure property rights. In this framework, potential rents associated with more exclusivity drives “demand” for commons arrangements but demand is not a sufficient explanation; norms and politics matter. At some point enhanced scarcity will drive demand for more exclusivity beyond which can be sustained with commons arrangements. Claimants will therefore petition government for de jure property rights to their claims – formal titles. Land conflict will be minimal when governments supply property rights to first possessors. But, governments may not allocate de jure rights to these claimants because they face differing political constituencies. Moreover, governments may assign de jure rights but be unwilling to enforce the right. This generates potential or actual conflict over land depending on the violence potentials of de facto and de jure claimants. We examine land settlement and conflict on the frontiers of Australia, the U.S. and Brazil. We are interested in examining the emergence, sustainability, and collapse of commons arrangements in specific historical contexts. Our analysis indicates the emergence of de facto property rights arrangements will be relatively peaceful where claimants have reasons to organize collectively (Australia and the U.S.). The settlement process will be more prone to conflict when fewer collective activities are required. Consequently, claimants resort to periodic violent self-enforcement or third party enforcement (Brazil). In all three cases the movement from de facto to de jure property rights led to potential or actual conflict because of insufficient government enforcement. JEL classification: D72; Q15; N40; N50; 017; K11 * For comments we thank Eric Alston, Krister Andersson, Lee Cronk, Ernesto Dal Bó, John Ferejohn, Stephen Haber, P.J. Hill, Gary Libecap, Thomas Mayer, Henry Smith, Ian Wills and participants at: a seminar on social norms at the Institute for Advanced Study in Princeton; a conference on “Australian Economic History in the Long Run;” the Research Group on Political Institutions and Economic Policy held at Princeton University; and seminars at the University of Colorado and Monash University. Alston and Mueller acknowledge the support of NSF grant #528146. Alston thanks the STEP Program at the Woodrow Wilson School at Princeton for their support as a Visiting Research Scholar during 2008/2009 and The Australian National University for support as Research Fellow in 2009. We thank Eric Alston for research assistance.