The Cambridge Series on the Political Economy of Institutions and Decisions is built around attempts to answer two central questions: How do institutions evolve in response to individual incentives, strategies, and choices? How do institutions affect the performance of political and economic systems? The scope of the series is comparative and historical rather than international or specifically American, and the focus is positive rather than normative.

The first edition of this work has become the classic statement of the property rights paradigm. In this second edition Yoram Barzel clarifies, elaborates, and extends the argument. Clarifications consist of more straightforward writing and making effective use of diagrams to illustrate complex theoretical points. Elaboration takes the form of greater depth of analysis in various sections of the study; for example, the old chapter “The Old Firm and the New Organization” has been divided into two chapters that now include new sections on divided ownership and on insurance. Barzel extends the argument to the role of the state in the formation of rights, the role of government in lowering transaction costs, and property rights to wildlife.

The property rights model developed in this book is an important extension and modification of economic theory, explaining an array of phenomena that standard theory cannot successfully address.