Coase-Sandor Working Paper Series in Law and Economics

Document Type

Working Paper

Publication Date



Property’s job is to help people derive benefits from resources.1 But often it cannot do this work well. A core problem is an outmoded model of benefit production that treats the individually owned parcel or “thing” as the relevant unit of analysis.2 Property theorists often use the example of a farm to illustrate how ownership induces people to invest (in sowing) by granting them exclusive rights (to reap the crops).3 On this account, property holdings operate in a largely self-contained fashion, collecting inputs from owners and delivering the associated returns to them. The primary role of property law, in this telling, is to protect the owned domain from outside interference so that the owner can pursue her choice of projects unimpeded.4

This vision of property is appealingly parsimonious: its basic building block consists of the thing, the thing’s owner, and the legally enforced boundary around the thing.5 And it is infinitely scalable and expandable as new things (and their owners and boundaries) are added to the system.6 But it fails to adequately account for the interdependencies and nonlinearities that characterize patterns of resource use within cities and ecosystems. Consider, for example, the agglomeration effects that come from putting together people and ideas in cities, the ecological services that come from assembling habitats at a sustainable scale, or the gains that come from subdividing access to resources in new ways through platform-based business models. What matters most in such contexts is the capacity to combine—and recombine—resources and cooperation into patterns that optimize the benefits that flow to people.

In this chapter, I argue for a conceptual shift from a property-as-thing-ownership (PATO) paradigm7 to a property-as-service-streams (PASS) model. I start with a simple observation: resources are only valuable for the streams of beneficial services that they can provide.8 Water rights offer an especially literal illustration of this point,9 but it is true of real and personal property more generally, from books and blenders to laptops and land. People seek residential services from their homes, computing and entertainment services from their devices, and transportation services from their cars. Things are merely delivery mechanisms, akin to a platter or a firehose, not the true object of interest. Moreover, owned items can only stream services to their users when combined with other resources and entitlements, many of which are controlled by other parties.10 For example, an urban lot’s capacity to stream housing services at a given density depends on regulatory permissions, infrastructure, and surrounding uses.

The relationship between individual asset ownership and benefit production, then, is not a straightforward one like the standard farm example suggests, but is instead highly contingent. It depends on the availability of substitutes (alternative ways to generate benefits) and complements (the additional elements, conditions, or goods necessary to make benefits flow). This revised understanding of benefit production carries implications for property—how it works, what it needs to do, and what strategies it should employ. Keeping discrete owned assets at center stage misdirects energy towards allocating and protecting things, when we should be examining how to nurture and sustain streams.

This chapter proceeds in three steps. I start with what the PATO to PASS move entails as a conceptual matter. I then examine the role of complements and substitutes in the PASS reformulation. Finally, I consider what PASS enables us to see and perceive about property, with implications for future innovation.

Included in

Law Commons