A THEORY OF AMBIGUOUS PROPERTY-RIGHTS IN TRANSITION ECONOMIES - THE CASE OF THE CHINESE NON-STATE SECTOR

Can ambiguous property rights sometimes be efficient? Ambiguous proper ty rights arise when owners' rights are not guaranteed beforehand. Ins tead, owners have to fight for actual control, ex post. We show that C hina's highly successful non-state sector is a major example of ambigu ous property rights. We then propose a theory of ambiguous property ri ghts, which argues that ambiguous property rights arise due to an impe rfect market environment. We argue that the immature market environmen t in China makes ambiguous property rights often more efficient than u nambiguously defined private property rights. (C) 1996 Academic Press, Inc.