On fuzzy frontiers and fragmented foundations : some reflections on the original and new institutional economics

This article has been published in a revised form in Journal of Institutional Economics, doi: https://doi.org/10.1017/S1744137414000307 This version is free to view and download for private research and study only. Not for re-distribution, re-sale or use in derivative works. © 2014 Millennium Economics Ltd, published by Cambridge University Press.These reflections are prompted by the papers by Ménard (2014) and Ménard and Shirley (2014). Their essays centre on the path-breaking contributions to the 'new institutional economics' (NIE) by Ronald Coase, Douglass North and Oliver Williamson. In response, while recognising their substantial achievements, it is pointed out that these three thinkers had contrasting views on key points. Furthermore, Ménard's and Shirley's three 'golden triangle' NIE concepts - transaction costs, property rights and contracts - are themselves disputed. Once all this is acknowledged, differences of view appear within the NIE, raising interesting questions concerning its identity and boundaries, including its differences with the original institutionalism. There are sizeable overlaps between the two traditions. It is argued here that the NIE can learn from the original institutionalism, particularly when elaborating more dynamic analyses, and developing more nuanced, psychologically-grounded and empirically viable theories of human motivation.Peer reviewedFinal Accepted Versio

Emissionshandel und Anreizmechanismen: Auswirkungen verschiedener Allokationsverfahren auf Produktionsweise und Investitionsverhalten von Unternehmen

Der Emissionshandel zeigt nur dann die erwünschte Wirkung, wenn das marktgerechte CO2-Preissignal zu Veränderungen beim Angebots- und Nachfrageverhalten in der Volkswirtschaft führt. Die damit verbundenen Preiseffekte sind - obwohl im betriebswirtschaftlichen Einzelfall möglicherweise unerwünscht - systemimmanent und müssen bestehen bleiben. Dadurch können Nachteile insbesondere für die europäische energieintensive Industrie entstehen, die sich nicht nur im europäischen, sondern auch im weltweiten Wettbewerb behaupten muss. Besondere Härten können aber abgemildert werden, indem die Europäische Kommission und ihre Mitgliedstaaten darauf achten, dass die CO2- und Strompreise in einer Größenordnung bleiben, die zwar zu Verhaltensänderungen der Marktakteure führt, dabei aber nicht das Kind mit dem Bade ausschütten und die Existenz der europäischen energieintensiven Industrie gefährden. Eine Versteigerung von Emissionsrechten ist nicht geeignet, die für einzelne Betroffene unerwünschten Verteilungseffekte zu beheben. Dagegen bergen Versteigerungen erhebliche Risiken für die Versorgungssicherheit, die langfristigen Strom- und Energieträgerpreise sowie den Wirtschaftsstandort Deutschland und Europa insgesamt.Emissions trading will only have the desired effect if the CO2 price signal, in line with the market, leads to changes in supply and demand behavior in an economy. The associated price effects are - although possibly undesired in a specific business case - systemic and must continue to apply. This may entail disadvantages, especially for Europe's energy-intensive industries that have to hold their own against not only European, but also worldwide competition. Special hardships can be mitigated, however, if the European Commission and its member states ensure that CO2 and electricity prices remain at a level that induces changes in the behavior of market players, but do not go further and jeopardize the existence of Europe's energy-intensive industry. Auctioning of allowances is not an appropriate means to lessen the for some companies undesired distribution effects. By contrast, auctioning harbors tremendous risks for the security of supply, for long-term electricity and energy-carrier prices, and for Germany and Europe in general as industrial locations

Accidental Politicians: How Randomly Selected Legislators Can Improve Parliament Efficiency

We study a prototypical model of a Parliament with two Parties or two Political Coalitions and we show how the introduction of a variable percentage of randomly selected independent legislators can increase the global efficiency of a Legislature, in terms of both the number of laws passed and the average social welfare obtained. We also analytically find an "efficiency golden rule" which allows to fix the optimal number of legislators to be selected at random after that regular elections have established the relative proportion of the two Parties or Coalitions. These results are in line with both the ancient Greek democratic system and the recent discovery that the adoption of random strategies can improve the efficiency of hierarchical organizations.Comment: 19 pages, 7 figures, new improved and longer versio

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Towards an economics of well-being

There is growing concern that presently dominant frameworks in economics no longer provide a way of adequately addressing and analysing the problems of today’s globalising and rapidly changing world. This article makes a number of fundamental proposals about how we might reframe economics to move it towards a clearer focus on human well-being. It develops arguments for a change in the basic ontological proposition and for the need to see ‘the economy’ as an instituted process of resource allocation. From this viewpoint, economics is then the study of resource allocation decisions and processes and the forces that guide these: from a human perspective it is about understanding who gets what, under what conditions and why? The paper argues that a pluralist approach to understanding the economy is necessary for political, analytical and technical reasons. Drawing on a range of contributions to heterodox economics, the paper argues that if we are to understand current crises and challenges, then our understanding of resource allocation in society must have a broader scope than is present in mainstream economics; it proposes a rethinking of economic agency and provides a critique of rational behaviour that is founded in shifting the emphasis from a narrow conception of welfare to well-being. Acknowledging human well-being as a multidimensional concept, the relationship between the well-being of the person and the collective is reconsidered and the methodological implications for the issue of aggregation are discussed. The article seeks to serve as a point of departure for formulating new research questions, exploring the relationships between human well-being and economic development and analysing economic behaviour and interactions in such a way as to bring us closer to peoples’ realities on the ground