Property Rights

DEFINITION of 'Property Rights'

Laws created by governments in regards to how individuals can control, benefit from and transfer property. Economic theory contends that government enforcement of strong property rights is a determinant regarding the level of economic success seen in the area. Individuals will create new forms of property to generate wealth, only when they are assured that their rights to their property will protect them against unjust and/or unlawful actions by other parties.

BREAKING DOWN 'Property Rights'

For example, if property rights were not established to prevent a government from freely expropriating foreign created business ventures without proper compensation, then it is unlikely that any foreign company would risk going into that country for risk of losing their entire operation.

While property rights regarding physical property has been well established. Many justice systems must now contend with property that solely exists in a digital or virtual setting. For example, who ultimately owns a house built in a game on the Internet, the user that created the house with his character? Or the game development company that created the game who also owns the server in which the house resides in?

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