The Demarcation of Land and the Role of Coordinating Property Institutions

Abstract

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.

From Today's City to Tomorrow's City: An Empirical Investigation of Urban Land Assembly

“…Hornbeck and Keniston (2014)'s empirical work on Boston's 1872 Great Fire confirms this view. Relatedly, differences in systems of land demarcation across the US states (Libecap and Lueck 2011) and across former British colonies (Libecap, Lueck, and O'Grady 2010) yield divergent economic outcomes. Finally, legal scholars such as Heller (1998) argue that problems of land assembly helped to inhibit redevelopment in Eastern Europe.…”

Industrial land development in urban villages in China: A property rights perspective

“…The shape of land parcels is mostly rectangular. Such land parcel system provides an important basis to facilitate land transactions and is more likely to lead to greater property investment and higher land values (Libecap & Lueck, 2011).…”

Notice Failure and Notice Externalities

“…Gary Libecap and Dean Lueck note that under metes and bounds land systems-which affords greater leeway in the specification of boundaries than formal marked boundaries or rectangular survey systems-settlers had at least two incentives to leave boundaries vague and flexible: (i) "in a wilderness it was costly to locate precise boundaries during the initial land claim, and hence difficult for the surveyor who followed to find those boundary markers"; and (ii) "given the lack of information about the location of the most desirable lands at the time of the initial land entry, claimants did not want to be bound to absolute markers" (Libecap & Lueck 2011a). Along similar lines, a patent applicant gains from being able to update her claims as competitors introduce new products, thereby improving the likelihood that the competitor falls within the scope of the claimed invention.…”

“…For these and other reasons, much of the land mass of the USA was settled through decentralized, metes and bounds allocation systems, whereby claimants defined property boundaries with nonstandard methods of measurement and parcel shape. Nonetheless, individuals demarcated land claims in rectangular parcels when the land was flat and homogeneous (Libecap & Lueck 2011a). They claimed land using metes and bounds when topography was rugged and quality varied.…”

“…They claimed land using metes and bounds when topography was rugged and quality varied. Using a natural experiment from 19th century Ohio, Gary Libecap and Dean Lueck (2011b) found large initial net benefits in land values from the rectangular system that persisted well into the 20th century. The lack of an overall framework for coordinating land demarcation, the vagueness of boundaries, and the irregular shapes of parcels were major contributors to property disputes.…”