Property Rights in the Age of AI

Property rights are the bedrock of institutional economics. North demonstrated across decades that the definition and enforcement of property rights is the single most important function institutions perform. Clear, secure, transferable rights minimize transaction costs, encourage investment, and establish the conditions for sustained growth. Ambiguous or insecure rights inhibit exchange and produce stagnation. The proposition is straightforward for physical property. It becomes complex for intellectual property, which is nonrival (my use does not diminish yours) and imperfectly excludable. Intellectual property law exists to create artificial scarcity where natural scarcity does not obtain. The AI transition destabilizes this framework at every level. Who is the creator when a human writes with an AI that generates prose, suggests revisions, and produces passages the author incorporates? The existing framework has no clear answer. The ambiguity itself is a transaction cost, and its resolution will determine who captures the value AI systems create.