Economic analysis of pre-emptive right in the Serbian Law on property restitution and compensation

• Main Author: Baturan Luka O.
• Format: Article
• Language: English
• Published: University of Novi Sad, Faculty of Law 2015-01-01
• Series: Zbornik Radova: Pravni Fakultet u Novom Sadu
• Subjects: pre-emptive right; the right of pre-emption; restitution; Law on Property Restitution and Compensation
• Online Access: http://scindeks-clanci.ceon.rs/data/pdf/0550-2179/2015/0550-21791504961B.pdf
• ISSN: 0550-2179; 2406-1255

This paper is application of cost-benefit analysis on a pre-emptive rights, which is established by the Serbian Law on Property Restitution and Compensation. The basic hypothesis is that this law institute disturbs efficiency of resource allocation, and decreases social welfare. There are a few better and more efficient institutes which can be used for gaining of goods in public ownership. To prove this hypothesis, we used neo-institutional economy method and normative method. In the first part of the paper, we presented the law of pre-emptive rights in the legal system of Serbia. After that, we analyzed effects of pre-emptive rights on a deviation from resource allocation. The third part represents an analysis of institutional frame for optimal resource allocation. There is a special view on imprecise definition of property rights, as well as the increased transaction costs due to the existence of the right of pre-emption.