Advanced Search
MyIDEAS: Login to save this article or follow this journal

"Climbing the hierarchical ladders of rules": A life-cycle theory of institutional evolution

Contents:

Author Info

  • Brousseau, Eric
  • Raynaud, Emmanuel

Abstract

This paper proposes an analysis of the emergence and evolution of institutional frameworks. It explains the causes, process, and outcome of institutional evolution. We first describe the institutional framework as a multilevel system at the bottom of which several "local and flexible" institutions apply to subsets of the society while, at the top, a single "generic and rigid" institution applies to all. Dissatisfied with generic order, promoters of local orders try to design collective governance solutions that are better suited to their needs. If agents are heterogeneous (as we assume), then coordination needs differ and a competitive process begins among sponsors of alternative orders. To benefit from efficiency gains, promoters of local orders encourage adherence to their preferred system of rules. The resulting competition for adherents explains why "local and voluntary" institutions might progressively turn into "generic and mandatory" ones. We thus establish a logical continuum between contractual governance mechanisms and institutions. We then analyze the strategic interplay among sponsors of alternative institutional orders by considering not only the "horizontal" competition among institutions emerging in the same time but also the "vertical" competition between promoters of new rules and sponsors of the established, more generic rules.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0167268111000588
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 79 (2011)
Issue (Month): 1-2 (June)
Pages: 65-79

as in new window
Handle: RePEc:eee:jeborg:v:79:y:2011:i:1-2:p:65-79

Contact details of provider:
Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Bargaining power Clubs Core members Institutional framework Institutional evolution Institutional layers Marginal members Network externalities Order;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Sgard, Jérôme & Schemeil, Yves & Brousseau, Eric, 2010. "Bargaining on law and bureaucracies: A constitutional theory of development," Economics Papers from University Paris Dauphine 123456789/7098, Paris Dauphine University.
  2. Brousseau, Eric, 2004. "Property rights on the internet: is a specific institutional framework needed?," Economics Papers from University Paris Dauphine 123456789/13245, Paris Dauphine University.
  3. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, American Economic Association, vol. 75(2), pages 332-37, May.
  4. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(4), pages 1027-56, November.
  5. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
  6. Paul R. Milgrom., 1987. "Employment Contracts, Influence Activities and Efficient Organization Design," Economics Working Papers, University of California at Berkeley 8741, University of California at Berkeley.
  7. Gillian K. Hadfield, 2004. "Delivering Legality on the Internet: Developing Principles for the Private Provision of Commercial Law," American Law and Economics Review, Oxford University Press, vol. 6(1), pages 154-184.
  8. Banner, Stuart, 1998. "The Origin of the New York Stock Exchange, 1791-1860," The Journal of Legal Studies, University of Chicago Press, University of Chicago Press, vol. 27(1), pages 113-40, January.
  9. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, American Economic Association, vol. 75(3), pages 424-40, June.
  10. Geroski, Paul A, 1999. "Models of Technology Diffusion," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2146, C.E.P.R. Discussion Papers.
  11. Paul R. Milgrom & Douglass C. North & Barry R. Weingast, 1990. "The Role Of Institutions In The Revival Of Trade: The Law Merchant, Private Judges, And The Champagne Fairs," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 2(1), pages 1-23, 03.
  12. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change
    [Understanding the Process of Economic Change]
    ," Introductory Chapters, Princeton University Press.
  13. Cooter, Robert & Landa, Janet T., 1984. "Personal versus impersonal trade: The size of trading groups and contract law," International Review of Law and Economics, Elsevier, Elsevier, vol. 4(1), pages 15-22, June.
  14. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(394), pages 116-31, March.
  15. Stephen E. Margolis & S.J. Liebowitz, . "Path Dependence, Lock-in and History," Working Paper Series, North Carolina State University, Department of Economics 10, North Carolina State University, Department of Economics.
  16. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
  17. S. J. Liebowitz & Stephen E. Margolis, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-150, Spring.
  18. Winter, Sidney G, 1971. "Satisficing, Selection, and the Innovating Remnant," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 85(2), pages 237-61, May.
  19. Broz, J. Lawrence, 1999. "Origins of the Federal Reserve System: International Incentives and the Domestic Free-rider Problem," International Organization, Cambridge University Press, Cambridge University Press, vol. 53(01), pages 39-70, December.
  20. Masahiko Aoki, 2001. "Toward a Comparative Institutional Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011875, December.
  21. Bernstein, Lisa, 1992. "Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry," The Journal of Legal Studies, University of Chicago Press, University of Chicago Press, vol. 21(1), pages 115-57, January.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Thiel, Andreas, 2012. "The politics of problem solving: A co-evolutionary perspective on the recent scalar reorganisation of water governance in Germany," UFZ Discussion Papers 09/2012, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  2. Brousseau, Eric & Garrouste, Pierre & Raynaud, Emmanuel, 2011. "Institutional changes: Alternative theories and consequences for institutional design," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 79(1), pages 3-19.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:79:y:2011:i:1-2:p:65-79. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.