A Law and Economics Analysis of the Property Rights Transfer Paradigm

The normative paradigm governing the transfer of property rights has long been a focal point of comparative law discourse, and remains a persistent challenge for both legislators and the judiciary. In recent years, legal scholarship has attempted to introduce law and economics to break the theoretical impasse and provide fresh perspectives for dogmatic analysis; however, some scholarship tends to use overly reductive and instrumentalist methodologies. Empirical judicial investigations demonstrate that courts at all levels continue to adhere to obligational formalism following the implementation of the Civil Code of the People’s Republic of China (Civil Code), and the theory of real juristic acts has failed to secure a consensus in practice. Divorcing the exploration of institutional choices from social realities makes such inquiries vulnerable to a reductive, efficiencyoriented fallacy. At the macro-level, shifting from obligational formalism to proprietary formalism would incur prohibitive institutional transition costs and negative social externalities. Under this shift, without quantitative measurement of total social costs and benefits, the paradigm shift can hardly satisfy the Kaldor-Hicks efficiency standard under current institutional conditions. At the micro-level, the doctrine of abstractness may shift part of transaction risk-hedging costs to the faultless original right holder in specific scenarios, yet German law restricts such effects through good faith acquisition, unjust enrichment and warranty systems to avoid protecting mala fide third parties, meaning that its total social benefits fail to cover its operational costs. Regarding the perfection of the property rights transfer paradigm, the law should maintain obligational formalism as its cornerstone and restructure the dichotomy between real and creditor’s rights from a functionalist standpoint. When law and economics intervene in traditional civil law research, it must transcend mere micro-cost calculations and respect the path dependency of the established institutional framework. Only in this manner can the risk of instrumental misuse be averted, thereby realizing a substantive refinement of both theory and doctrine.