Property rights, transaction costs and institutional change: Conceptual framework and literature review

For want of appropriate and effectual methodological approaches or analytical instruments, analysis of socio-economic phenomena can sometimes be problematic. As Frances et al. have aptly noted, any analysis of social nature begs the question: ‘with what theoretical tools do we approach the analysis of events and processes?’ (p. 1). In land matters, for example, Malpezzi (1999b,c) has keenly observed that most of the studies on land reforms have focused on the rural and agricultural sectors, at the expense of the urban sector. Arguably, the paucity of land policy/reform studies on the urban sector could be explained, to a large measure, by the fact that most of the studies carried out in this area apply theoretical frameworks or models that are highly abstract (e.g. neoclassical economic models) or too simplistic in approach.11On the methodology of economics, Case (1986: 5) asserts that: ‘To answer real-world questions one must deal explicitly with the institutional, social and political context within which economic forces operate.’ Consistent with Coase (1992a), Case notes, however, that for the sake of simplicity of understanding of the underlying economic factors, economists strip off the institutional details from their theories or models. models or methodological frameworks may not be readily applicable or efficacious in explaining the convoluted urban land market realities. The narrow option for alternative tools of analysis for studying land market ‘events and processes’ (to use Frances et al.’s (1991) terminology) may well have hindered land policy/reform research in the urban sector. Against that background, this paper advances an eclectic, property-rights-based approach that is robust and versatile enough to have wide application. An empirical study conducted under the framework attests to the relevance of such an approach to land use policy and urban land market analysis.