Working Paper No. 01-14:
Entropy in Property

Author(s):

Francesco Parisi

Date Posted: 2001

Availability:
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Abstract:

This article suggests that property is subject to a fundamental law of entropy, namely that it is affected by a one-directional bias leading towards increasing fragmentation. The application of the laws of entropy to property further indicates that one can avoid this tendency only in the purely abstract world of zero transaction costs. Building upon this consideration, I consider the choice of remedies in property law, focusing on legal rules that are designed to promote (a) functional, (b) legal, and (c) physical unity in property. I provide examples drawn from both common law and civil law systems, supporting the hypothesis that legal rules are instrumental in combating entropy in property.