Definition
Private property is the institution under which specific resources are owned by identifiable individuals or organizations rather than held in common or controlled by the state. The owner can use the asset, capture its returns, exclude others, and sell or lease it.
It is one of the foundational institutions of a market economy. Without private property, voluntary exchange has nothing definite to trade, and prices cannot reliably reflect scarcity.
Why it matters
How it works
Private property bundles together several rights: the right to use, to earn income from, to transfer, and to exclude. When these rights are clearly defined and enforceable, owners internalize both the benefits and the costs of their decisions.
This alignment encourages stewardship: an owner who profits from good upkeep and bears the loss from neglect tends to use resources carefully. Where ownership is unclear, the tragedy of the commons can lead to overuse.