Property rights to a good must be defined, their use must be monitored, and possession of rights must be enforced.The costs of defining, monitoring, and enforcing property rights are termed transaction costs. Depending on the level of transaction costs, various forms of property rights institutions will develop. Each institutional form can be described by the distribution of rights.
The following list is ordered from no property rights defined to all property rights being held by individuals
- Open-access property (res nullius) is not 'owned' by anyone. It is non-excludable (no one can exclude anyone else from using it) but may be rival (one person's use of it reduces the quantity available to other users). Open-access property is not managed by anyone, and access to it is not controlled. There is no constraint on anyone using open-access property (excluding people is either impossible or prohibitively costly). Examples of open-access property are the upper atmosphere (navigable airspace) or ocean fisheries (navigable waterways).
Open-access property may exist because ownership has never been established, granted, by laws within a particular country, or because no effective controls are in place, or feasible, i.e., the cost of exclusion outweighs the benefits. The government can sometimes effectively convert open access property into private, common or public property through the land grant process, by legislating to define public/private rights previously not granted.
- Public property (also known as state property) is property that is owned by all, but its access and use are controlled by the state or community. An example is a national park or a state-owned enterprise.
- Common property or collective property is property that is owned by a group of individuals. Access, use, and exclusion are controlled by the joint owners. True commons can break down, but, unlike open-access property, common property owners have greater ability to manage conflicts through shared benefits and enforcement.
- Private property is both excludable and rival. Private property access, use, exclusion and management are controlled by the private owner or a group of legal owners.