The importance of property rights institutions to economic progress is well understood by readers of this JOURNAL. Finding a book for upper-level undergraduate or graduate students that conveys the nuances of the property rights literature, however, is fairly difficult. “This book reflects the editors' long-held belief that a basic text on property rights was long overdue” (p. ix). Although the research presented in this fine volume is far from path breaking, Terry Anderson and Fred McChesney have assembled 13 chapters that will immerse uninitiated readers into the modern theory of property rights economics. By keeping the rigor of the analysis throughout the volume at a modest level and by encouraging the authors to use numerous historical examples in their chapters, the editors have clearly succeeded in creating the basic text they envisioned.

The volume is divided into six parts, each with introductory remarks by the editors. Part 1 provides some intellectual history. Edwin West provides a history of thought regarding property rights, and Yoram Barzel's chapter, in true Coasean tradition, portrays the firm as a set of contractual relationships across numerous vested interests. Part 2 explores the distinction between open access and common property. Tráinn Eggertsson provides a theoretical distinction between the two sets of institutions and offers insights into the economic rationale behind the transition from open access to communal property, which would ultimately give way to individual ownership. Louis DeAlessi's chapter provides a series of examples and case studies that puts Eggertsson's analysis into empirical perspective. Part 3 delves into the process of institutional change. Terry Anderson and P. J. Hill analyze how exogenous changes in an economy change the benefits and costs of adopting a new property rights regime. Gary Libecap's chapter on “contracting for property rights” discusses how transaction costs, bargaining costs, and political activity can slow the process of income-enhancing institutional reform. Finally, David Haddock explores how property rights can evolve in the absence of government intervention or enforcement. As he discusses, might sometimes makes right.

Part 4 introduces the role of government in the creation and enforcement of property rights. Dean Lueck's chapter describes how rules allowing for first possession of an asset can ultimately mitigate rent dissipation. Government, either through statute or common law, can facilitate wealth creation by mitigating the uncertainty associated with open access. First possession rules accomplish this task, though with some potential cost. Fred McChesney's chapter lays out a more general framework for government intervention, but shows that the coercive power of the state can be used for redistributive purposes. Once government and politics becomes involved, achieving anything resembling the first, or even second, best becomes questionable.

Part 5 offers complementary chapters by Bruce Yandle and Harold Demsetz exploring the role of property rights and transaction costs in solving externality problems. From Yandle's perspective high transaction costs should not automatically lead to calls for a government solution. He argues that it may be a question of creating a new type of market that provides the proper incentives for Coasean bargaining. Similarly, Demsetz points out that the transaction costs associated with achieving a Coasean solution are simply costs of doing business. If bargaining fails, it must be the case that the costs of integrating the competing parties' interests are greater than the expected gains. Demsetz argues that government has costs of its own to bear and it becomes an empirical question whether state intervention is the panacea to the externality problem. The final part of the volume delves deeper into the question of government as the definer and defender of property rights. Chapters by Richard Epstein on takings and William Fischel on zoning clearly illustrate the inherent problems associated with abdicating power to political agents to create a public good, broadly defined. The bottom line is that the coercive power of the state can be abused.

Although the introductions to the various parts of the book are very useful in helping students place the chapters into proper perspective within the overall literature, it would have been equally helpful if the editors had provided stimulating review questions. Such an addition would have enhanced the value of the volume as a textbook. Despite this minor quibble, this edited volume would serve as an excellent reading supplement in law and economics, economic history, or political economy courses that tend to have a property rights focus. For graduate students considering dissertations that will have a property rights perspective, this volume offers an outstanding beginning.