This dissertation explores a central government’s decision to either protect its citizens’ property or to instead create the incentives that encourage citizens to protect their own property. A central government protects its citizens’ property through centralized property protection mechanisms while individual citizens protect their own property through decentralized and private property protection mechanisms. Based on the results of the formal model designed in Chapter 4, a central government is less likely to protect its citizens’ property and more likely to allow the development of decentralized and private property protection mechanisms when the amount of tax revenue the central government receives from the citizen is low, the value of the product the citizen produces is low, and the amount of budgetary concerns the central government has is high. The empirical section of the dissertation analyzes the development of centralized, decentralized, and private property protection mechanisms in Nueva España in the 18th and early 19th centuries.