Did Different Rules for Establishing Property Rights in Land Impact Development? Evidence from Colonial South Australia, 1837–1910

In 1837, British authorities used two rules to allocate rights to 999 one-acre parcels in the new town of Adelaide, South Australia. The first 408 acres were allocated by Random Serial Dictator (RSD) rules to British investors who pre-purchased selection rights while the 591 remaining acres were then each sold at auction. Did the allocation rules impact acre development? We find that the institutional shock generated by the rules depressed development on “Preliminary Land Orders” (PLO) acres relative to auction acres of comparable quality in 1850 and 1860. The development gap shrank by more than two thirds in 1880, and had disappeared by 1910.