Dean Lueck

The Nature of the Farm

Using a model based on a trade‐off between moral hazard incentives and gains from specialization, this paper explains why farming has generally not converted from small, family‐based firms into large, factory‐style corporate firms. Nature is both seasonal and random, and the interplay of these qualities generates moral hazard, limits the gains from specialization, and causes timing problems between stages of production. By identifying conditions in which these forces vary, we derive testable predictions about the choice of organization and the extent of farm integration. To test these predictions we study the historical development of several agricultural industries and analyze data from a sample of over 1,000 farms in British Columbia and Louisiana. In general, seasonality and randomness so limit the benefits of specialization that family farms are optimal, but when farmers are successful in mitigating the effects of seasonality and random shocks to output, farm organizations gravitate toward factory processes and corporate ownership.

Transaction Costs and the Design of Cropshare Contracts

Modern cropshare contracts are explained using a model in which agents are risk neutral and contract rules are chosen to maximize expected joint wealth. It is shown that the farmer either bears the entire cost of inputs or shares the costs with the landowner in the same proportion as the output. The incentives of altering the cropshare percentage are examined and are used to derive implications about the portion of the crop that will be owned by the farmer. The model is tested and supported using data from a 1986 survey of farmers and landowners in Nebraska and South Dakota.

Preemptive Habitat Destruction Under the Endangered Species Act

This paper examines the extent to which landowners have preemptively destroyed habitat for the endangered red‐cockaded woodpeckers (RCWs) in the forests of North Carolina in order to avoid potential land‐use regulations prescribed under the Endangered Species Act (ESA). Under the ESA, it is illegal to kill an endangered species and it is also illegal to damage its habitat. By preventing the establishment of an old‐growth pine stand, landowners can ensure that RCWs do not inhabit their land and avoid ESA regulations that limit or prohibit timber harvest activity. Data from 1984–90 on over 1,000 individual forest plots are used to test predictions about the probability of harvest and the age of timber when it is harvested. We find that increases in the proximity of a plot to RCWs increases the probability that the plot will be harvested and decreases the age at which the forest is harvested.

The Rule of First Possession and the Design of the Law

Economists have shown that first possession might cause rent dissipation from racing or overexploitation. In this study, I develop models that show how dissipation can be avoided and use the derived implications to explain the observed pattern of first possession rules in a variety of legal fields. The analysis hinges on the recognition that possession may extend to either the entire stock of a resource or simply a onetime flow from that stock. Not only do the paths of rent dissipation depend on this distinction, but so do the predicted responses of the law. When first possession has the potential for a race, the law tends to mitigate dissipation by assigning possession when differences between claimants are greatest. Alternatively, when first possession leads to overexploitation through a rule of capture, the law tends to limit access and restrict the transfer of access rights in order to limit open access dissipation.

The demarcation of land and the role of coordinating property institutions

We use a natural experiment in nineteenth-century Ohio to analyze the economic effects of two dominant land demarcation regimes, metes and bounds (MB) and the rectangular system (RS). MB is decentralized with plot shapes, alignment, and sizes defined individually; RS is a centralized grid of uniform square plots that does not vary with topography. We find large initial net benefits in land values from the RS and also that these effects persist into the twenty-first century. These findings reveal the importance of transaction costs and networks in affecting property rights, land values, markets, and economic growth.

Common property as an egalitarian share contract

Abstract Common property is an endogenous institution and modeled as a joint wealth maximizing egalitarian share contract among an exclusive group of resource owners. The conditions are derived in which common property generates greater wealth than private property. A distinction is made between contracts in which group members share final output and contracts in which groups only share access to a commonly owned resource. In both cases homogeneity in production by members is shown to be efficient. Several case studies of common ownership are presented as support of the model.

The Economic Nature of Wildlife Law

LAWS are endogenous economic variables determined by relative costs and values. They are one means by which property rights are specified. Wildlife laws, for example, are complicated and seem to lack an economic logic; they offer a chance to examine the economic forces underlying legal institutions. In this article, I advance the hypothesis that wildlife law reflects the assignment of property rights to wildlife that maximizes the value of land and its associated wildlife stocks, subject to the often substantial costs of transacting. Although this hypothesis may appear to be tautological, testable implications can be derived by specifying transaction costs.

The Extermination and Conservation of the American Bison

The dramatic near extinction, and subsequent recovery and restoration, of the American bison during the late nineteenth century is examined using a property rights model of renewable resource production. The paper considers the implications of bison exploitation under open‐access, common‐ownership, and private‐property regimes and further examines how these regimes are determined. Implications are tested against historical and anthropological data on bison populations, robe and hide prices, cattle‐stocking rates, American military behavior, Indian tribal territories, federal land policy, the costs of harvesting bison, and formal and informal property rights regimes. The study uncovers the details of this famous story in American wildlife conservation and sheds light on the role of markets in extinction and preservation and the evolution of property rights to such large‐scale natural resources.

Market and Regulatory Forces in the Pricing of Legal Services

New data on individual law firms and attorneys is used to examine the effects of professional licensing restrictions and market forces on prices of legal services. The data allow detailed testing of the hypothesis that licensing restrictions serve to increase the price of professional services as well as the incomes of those providing these services. In general, little support is found for this hypothesis. Instead, the estimates show that market forces are most important in explaining variations in prices and attorney incomes.

Human Capital Accumulation and the Expansion of Women's Economic Rights

Between 1850 and 1920, most U.S. states enacted laws expanding the rights of married women to own and control their separate property and to own their market earnings. The economic approach to property rights implies that as married women gain economic rights, the incentive to invest in girls’ human capital will rise. This prediction is tested by examining the impact of these legal changes on girls’ school attendance rates relative to boys’. State-level census data are used to examine the effects of these changes on school attendance among all school-aged children. Integrated Public Use Microdata Series data are used to examine their effect on school attendance among children ages 15–19, who are just beyond compulsory schooling ages. Consistent with hypothesized effects, the empirical analysis shows that expanding women’s economic rights resulted in higher relative rates of school attendance by girls and had the largest effect on the 15–19 age group.