Owning versus renting : do Courts Matter?/
Casas‐Arce, Pablo
Owning versus renting : do Courts Matter?/ created by Pablo Casas‐Arce and Albert Saiz - Journal of Law and Economics Volume 53, number 1 .
We develop a legal contract enforcement theory of the decision to own or lease. The allocation of ownership rights will minimize enforcement costs when the legal system is inefficient. In particular, when legal enforcement of contracts is costly, there will be a shift from arrangements that rely on such enforcement (such as a rental agreement) toward other forms that do not (such as direct ownership). We then test this prediction and show that costly enforcement of rental contracts hampers the development of the rental housing market in a cross section of countries. We argue that this association is not the result of reverse causation from a developed rental market to more investor protective enforcement and is not driven by alternative institutional channels. The results provide supportive evidence for the importance of legal contract enforcement for market development and the optimal allocation of property rights
00222186
Cities--Contracts--Contract enforcement
Housing--Investors--Instrumental variables
Leases--Market development--Legal systems
HB73 JOU
Owning versus renting : do Courts Matter?/ created by Pablo Casas‐Arce and Albert Saiz - Journal of Law and Economics Volume 53, number 1 .
We develop a legal contract enforcement theory of the decision to own or lease. The allocation of ownership rights will minimize enforcement costs when the legal system is inefficient. In particular, when legal enforcement of contracts is costly, there will be a shift from arrangements that rely on such enforcement (such as a rental agreement) toward other forms that do not (such as direct ownership). We then test this prediction and show that costly enforcement of rental contracts hampers the development of the rental housing market in a cross section of countries. We argue that this association is not the result of reverse causation from a developed rental market to more investor protective enforcement and is not driven by alternative institutional channels. The results provide supportive evidence for the importance of legal contract enforcement for market development and the optimal allocation of property rights
00222186
Cities--Contracts--Contract enforcement
Housing--Investors--Instrumental variables
Leases--Market development--Legal systems
HB73 JOU