A Dynamic Option Value for Institutional Change: Marketable Property Rights in the Sahel

12 Pages Posted: 31 Mar 2020

See all articles by Frederic J. Zimmerman

Frederic J. Zimmerman

affiliation not provided to SSRN

Michael R. Carter

University of Wisconsin - Madison - Department of Agricultural & Applied Economics

Date Written: May 1999

Abstract

In this article we use dynamic programming methods to create an option value measure of the value of the institutional innovation of marketable property rights. This measure has two properties that are important to understanding institutional change: it is truly dynamic and it allows for agent heterogeneity. In the case of West Africa, we find that the collapse of customary risk management institutions is a vital part of the demand for marketability rights as agents struggle to smooth income and consumption in its wake. We find that the social efficiency implications of this demand for institutional innovation are ambiguous.

Keywords: heterogeneity, institutional innovation, land markets, O130, Q150

Suggested Citation

Zimmerman, Frederic J. and Carter, Michael R., A Dynamic Option Value for Institutional Change: Marketable Property Rights in the Sahel (May 1999). American Journal of Agricultural Economics, Vol. 81, Issue 2, pp. 467-478, 1999, Available at SSRN: https://ssrn.com/abstract=3564534 or http://dx.doi.org/10.2307/1244595

Frederic J. Zimmerman (Contact Author)

affiliation not provided to SSRN

No Address Available

Michael R. Carter

University of Wisconsin - Madison - Department of Agricultural & Applied Economics ( email )

427 Lorch St.
Madison, WI 53706-1503
United States
608-263-2478 (Phone)

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