When Does The Principle "Whoever Invests,Benefits" Hold?A Case Study Of Property Rights Competition Between Private Investors And Government In The Field Of Natural Resources Development

Astrand of literature,based on the studies of Chinese market reform,argue that "whoever invests,benefits" is the basic principle of property rights.This claim,however,fails to specify the preconditions on which the principle is established.This paper argues that a critical precondition has to be met,the so-called vertical constraint mechanism,especially when private investors and government are involved in the same competition.The vertical constraint mechanism is further based on two conditions:first,there has to be a higher level of authority that is capable to constrain the government involved in the property rights disputes;second,the private investors have to possess the capability to stage a collective action against the competitors.Our empirical investigations are based on two representative case studies-oilfield disputes case in Shaanxi and beach reclamation debate in Pearl River Delta.Although the private investors in both cases organized a collective protest,they encountered with different endings that the principle of"whoever invests,benefits" held in the former case but failed to do so in the latter case.The effectiveness of the vertical constraint mechanism,we argue,could account for this discrepancy,which provides empirical evidence to our argument.