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Climbing the Hierarchical Ladders of Rules : A Life-cycle Theory of Institutional Evolution

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  • Eric Brousseau

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

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.
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  • Eric Brousseau, 2011. "Climbing the Hierarchical Ladders of Rules : A Life-cycle Theory of Institutional Evolution," Post-Print halshs-00672634, HAL.
    • Handle: RePEc:hal:journl:halshs-00672634
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    Cited by:

    1. Brousseau, Eric & Garrouste, Pierre & Raynaud, Emmanuel, 2011. "Institutional changes: Alternative theories and consequences for institutional design," Journal of Economic Behavior & Organization, Elsevier, vol. 79(1-2), pages 3-19, June.
    2. Guilherme Fowler A. Monteiro & Bruno Varella Miranda, 2023. "Disentangling the role of the institutional environment in the ownership competence framework: A comment on Foss et al. (2021)," Strategic Management Journal, Wiley Blackwell, vol. 44(8), pages 1939-1954, August.
    3. Thiel, A., 2014. "Towards Understanding the Scalar Re-Organisation of Natural Resource Governance: Factors Derived from Water Governance in Spain, Portugal and Germany," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 49, March.
    4. 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).
    5. Gagalyuk, Taras & Chatalova, Lioudmila & Kalyuzhnyy Oleksandr, 2021. "Broadening the scope of instrumental motivations for CSR disclosure: an illustration for agroholdings in transition economies," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(4), May.
    6. Gagalyuk, Taras & Chatalova, Lioudmila & Kalyuzhnyy, Oleksandr & Ostapchuk, Igor, 2021. "Broadening the scope of instrumental motivations for CSR disclosure: An illustration for agroholdings in transition economies," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(4), pages 717-737.
    7. Lijun Angelia Chen & Bruno Varella Miranda & Joe L. Parcell & Chao Chen, 2019. "The foundations of institutional-based trust in farmers’ markets," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 36(3), pages 395-410, September.
    8. Thiel, Andreas, 2013. "Towards Understanding the Scalar Re-Organisation of Natural Resource Governance: Factors Derived from Water Governance in Spain, Portugal and Germany," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156967, German Association of Agricultural Economists (GEWISOLA).
    9. Helmsing, A.H.J., 2013. "Analyzing Local Institutional Change," ISS Working Papers - General Series 50073, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    10. Ting Jiang & Shaobing Zhuo & Chaozhi Zhang & Jun Gao, 2019. "The Impact of Institutions on the Evolution of Tourism Accommodation Format: Evidence from Wulingyuan, China," Sustainability, MDPI, vol. 11(10), pages 1-16, May.
    11. Colin O'Reilly, 2021. "Violent conflict and institutional change," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(2), pages 257-317, April.

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    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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