Emergence of Sago Palms as Private Property: An Extension of Demsetz’s Thesis of the Origins of Private Property

Abstract Harold Demsetz (1967 . “Towards a Theory of Property Rights,” The American Economic Review 57(2): 350), in a seminal paper, developed an economic thesis of the emergence of private property: “[P]roperty rights develop to internalize externalities when the gains of internalization become larger than the cost of internalization…. [G]iven a community’s tastes … the emergence of new private or state-owned property rights will be in response to changes in technology and relative prices.” Demsetz used his theory to explain anthropologist Leacock’s findings about the emergence of private hunting grounds for fur-bearing animals among the Canadian Montagne Indian tribes living in Quebec. In a more recent paper, Demsetz (2002 . “Toward a Theory of Property Rights II: The Competition between Private and Collective Ownership,” The Journal of Legal Studies 31: S653–72) broadened his theory to include the emergence of private property from state enforcement of contractual rights. In this paper, I revisit Demsetz’s thesis by showing that there is another pathway to the emergence of private property. The facts I use to develop my law and bioeconomics-public choice theory of the emergence of sago palms as private property are based on anthropologist H. S. Morris’s (1976 . “A Problem in Land Tenure,” in G. N. Appell (ed.) The Societies of Borneo: Explorations in the Theory of Cognatic Social Structure , pp. 110–20. Washington, DC: American Anthropological Association) case study of Melanau hunter-gatherer-fishing tribal people living in Sarawak where individuals held sago palms as private property.