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"When property rights are assigned, individuals may respond to the externality by bargaining with each other."
What Are Property Rights?
Property rights define the theoretical and legal ownership of resources and how they can be used. These resources can be both tangible or intangible and can be owned by individuals, businesses, and governments. In economics, property rights form the basis for all market exchange, and the allocation of property rights in a society affects the efficiency of resource use.
Property is protected by state laws that are clearly defined and enforced. These laws specify property ownership as well as any benefits that come with it. Property is a broad phrase, with different legal protections for different types of property depending on where you live.
Individuals or a small group of people usually own property. Patents and copyrights can be used to protect the following aspects of property ownership:
Physical resources such as houses, vehicles, books, and cellphones are in short supply.
Nonhuman animals such as dogs, cats, horses, and birds
Inventions, ideas, and words are examples of intellectual property.
Other types of property are legally owned by well-defined parties, such as communal or government property. Typically, these are considered public property. Individuals in positions of political or cultural authority enforce ownership.
Property rights allow the owner or right holder to do whatever they want with the property. Holding on to it, selling or renting it for a profit, or transferring it to another party are all options.
What Can The Community Do?
To reduce people from littering and such pollution in the private property such as the paddy fields or the residential area, the community can register their property rights. By doing so, those who tend to litter and make pollution around the area will need to pay for the reparation. Apart from that, mutual agreement also can be reached. Assigning property rights could help solve some significant problems, such as reversing the littering around the residents area. The Kampung Perlis community first need to acknowledge their property and their rights.
Nonetheless, before such measure can be taken, there are two important assumptions played a key role in property rights:
The costs to the parties of bargaining are low.
The owners of resources can identify the source of damages to their
property and legally prevent damages.
Therefore, if pollution and littering continuously happening in the residential area, the community might need to take their time and identify the source of the pollution, before legal action can be taken. Apart from that, The Coase Theorem is most relevant for cases in which only a few parties are involved and the sources of the externality are well defined. The community may need to know the root cause of the littering around the area.
Coase Theorem implies that once property rights are established, government intervention is not required to deal with externalities
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