Partial Common Ownership
A system of property rights that blends the free market mechanics with common ownership..
The Geo Web uses a novel property rights regime called partial common ownership
to fairly and efficiently administer its digital land market. Partial common ownership is a market-based solution with an important twist on private property rights:
- 1.Landholders must publicly declare a
For Sale Pricefor each of their land parcels
- 2.Landholders pay a license fee to the network based on a percentage of their
For Sale Price
- 3.Any market participant can force the transfer of a parcel by paying the current landholder their
For Sale Price
This system can be conceptualized as creating leases with equity buyout mechanisms.
There are multiple ways to implement these basic rules in a smart contract with different technical, user experience, and market tradeoffs.
The Geo Web currently uses streaming payments for license fees along with a more owner-forgiving continuous auction mechanism.
Here's an overview of how it works in practice:
The Geo Web implements and enforces these rules via the Digital Land Registry smart contracts. It's an elegant system that enables a unified global digital land market with minimal centralization and overhead.
The system offers numerous benefits for the network's health versus a system of pure private property rights:
- The system encourages allocative efficiency. Essentially, it's easier for land to make its way into the hands of those that will put it to higher productive use because they are willing to pay more.
- This dynamic increases the aggregate utility of the network and helps drive a virtuous network effects cycle.
- The requirement for a public
For Sale Priceeliminates long, inefficient negotiations and monopoly holdouts.
- This is a pervasive issue in the World Wide Web's domain name market. This dynamic would severely hamper adoption due to the low substitutability of two land parcels.
- An individual holding a parcel of land means all other participants (i.e. "the network") are excluded from doing the same. This system assesses direct cost to the landholder to compensate the rest of the network for their exclusion—making for a more fair system.
Network Feesare used to fund protocol and ecosystem development which, in turn, drives value and users.
While the novelty of this property rights system will require effective messaging and additional user education, it is the optimal system for taking the Geo Web from bootstrap to scale.
This system is also known as Harberger Taxes (economist Arnold Harberger initially outlined the basic scheme), Self-Assessed Licenses Sold at Auction (SALSA), Common Ownership Self-assessed Tax (COST), and Depreciating Licenses. Most recently it's gained attention through the book Radical Markets by Eric A. Posner and Glen E. Weyl. Vitalik Buterin has helped popularize the idea in blockchain/crypto circles as well.