Property Rules, as famously described by Calabresi and Melamed, are remedial rules that place a prohibitively high penalty on violations of rights. This Article examines two aspects of property rules. In each case, the form of the rule is critically important. The first question addressed is the capacity of property rules to affect behavior that takes place outside the context of litigation. Most economic analysis assumes that when a right is protected by a property rule, the property rule will guide private decisionmaking at the time of a contemplated violation, and possibly before that time. Yet, to have this effect, property rules (and liability rules) must be embodied in a set of determinate legal rules defining not only the penalty imposed on violation, but also the entitlements protected and the conditions on which the property-rule remedy is available. Property rules, in other words, must be rules. In fact, “true property rules” that meet this description are scarce. This casts some doubt on the predictions made in literature on the subject. Theory and doctrine may or may not be reconcilable, depending on the desirability and feasibility of determinate rules in the area of remedies. In existing law, most true property rules protect property rights. This leads to the second question addressed here: what relationship, if any, do property rules bear to property?
After examining several theories others have proposed to explain the association between property rules and property rights, I suggest that property rules are connected to property in two ways. First, deterrent property rules ensure the continuity that makes property rights valuable to owners and to society. Second, once property rights are securely in place, the value they generate makes property rules a more efficient response to the possibility of unilateral taking. To achieve these results, however, both property rights and property rules must be implemented by general, determinate, and authoritative legal rules.
Entitlements (Law), Injunctions, Property rights, Regulatory taking (Law), Remedies (Law), United States