Property Rights Without Transfer Rights : A Study of Indian Land Allotment

Governments often place restrictions on the transferability of property rights to protect property owners from making “mistakes” such as selling their property under value. However, these restrictions entail costs: they reduce the property’s value as collateral in credit markets, limit owners’ ability and incentives to invest in the land, and create various transaction costs that constrain optimal land use. We investigate these costs over the long run, using a natural experiment whereby millions of acres of reservation lands were allotted to Native American households under differing land-titles between 1887–1934. We compare non-transferable land plots to neighboring plots held with full property rights, using fine-grained satellite imagery to study differences in land development and agricultural activity from 1974–today