1 Can trade and exchange occur within the firm without the e

1. Can trade and exchange occur within the firm without the existence of private property rights?

2. If individual property rights are necessary for economic success, how might the firm allow property rights?

Please provide links to any websites you use for references. Thank you

Solution

1. Can trade and exchange occur within the firm without the existence of private property rights?

Ans: Trade and exchange cannot occur effectively within the firm without the existence ofprivate property rights.“A property right is the exclusive authority to determine how a resourceis used, whether that resource is owned by government or by individuals.” Therefore, the property rights in a firm are the rights to the services of the resources, rights tomake decisions regarding the use of those resources, and the rights of each employee which needto know exactly what his responsibilities are and what decisions he can make on his own.Government regulates these private property rights while the public approves their procedures.These rights to resources used are allocated to the firm’s owners to circumvent delayingdifficulties and are the private property rights necessary for the firm to function.

Reference:

Book: \"Managerial Economics: Markets and the Firm\" by By William Boyes

https://www.cs.cornell.edu/home/kleinber/networks-book/networks-book-ch24.pdf

2. Property rights are definitely an important element of economic success and is actually the main point of difference between developed and less developed economies. Business of any form is owned by a group of individuals with some form of sharing amongst them in the results of the business. These individuals have a property right in their portion of that profit and the underlying net assets of the firm.