Glossary for New Institutional Economics - In English
Version: | English | Chinese Simplified | Chinese Traditional | Arabic |
Version: | English | Chinese Simplified | Chinese Traditional | Arabic |
Compiled by Alexandra Benham
| Collective Action
| Commons
| Contract
| Corruption
| Governance Structure
| Informal Economy
| Institution
| New Institutional Economics
| Opportunity Cost |
| Organization
| Path Dependence
| Property Rights
| Rent-Seeking
| Social Capital
| Social Cost
| Transaction
| Transaction costs |
Institution
The rules of the game: the humanly devised constraints that
structure human interaction. They are made up of formal
constraints (such as rules, laws, constitutions), informal
constraints (such as norms of behavior,
conventions, self-imposed codes of conduct), and their enforcement
characteristics.
Ref
New Institutional Economics
Incorporates a theory of institutions into economics. It builds
on, modifies, and extends neoclassical theory. It retains and builds
on the fundamental assumption of scarcity and
hence competition - the basis of the choice theoretic approach that
underlies microeconomics.
It has developed as a movement within the social sciences, especially economics and
political science, that unites theoretical and empirical research examining the role of institutions in
furthering or
preventing economic growth. It
includes work in transaction costs, political economy, property
rights, hierarchy and organization, and public choice. Most
scholars view the work of Ronald Coase as a central inspiration for the
field.
Ref
Organization
A group of individuals bound by some common purpose to achieve
objectives. Organizations include political bodies (political parties, regulatory agencies), economic bodies
(firms, trade unions), social bodies (churches, clubs), and educational bodies (schools,
universities).
Note that the term "institution" refers to the rules of the game,
whereas "organization" refers to players of the game.
Ref
Transaction
A transaction occurs when a good or service is transferred across a technologically separable interface.
Ref
Transaction Costs
The costs of resources utilized for the creation, maintenance,
use, and change of institutions and organizations. They include the
costs of defining and measuring resources or claims, the costs of
utilizing and enforcing the rights specified, and the costs of
information, negotiation, and enforcement.
Ref
Property Rights
There are two distinct meanings: economic property rights and
legal property rights. The economic property rights of an individual
over a commodity or an asset are the individual's ability, in
expected terms, to consume the good or the services of the asset
directly or to consume it indirectly through exchange. These can include
(1) the right to use an asset, (2) the right to earn income from an
asset and contract over the terms with other individuals, and (3) the
right to transfer ownership rights permanently to another party.
The legal property rights are the property rights that are
recognized and enforced by the government.
Ref
Governance Structure
1. A system of rules plus the instruments that serve to enforce the rules.
2. The explicit or implicit contractual framework (including markets, firms,
and mixed modes) within which a transaction is located.
Ref
Contract
A legally enforceable agreement. It is a formal, legal commitment
to which each party gives express (though not necessarily written)
approval and to which a particular body of law applies.
Ref
Social Cost
An actor (business firm, individual, etc.) initiating an action does
not necessarily bear all the costs or reap all the benefits of that
action. Those that the actor does bear are the private costs; those
that the actor does not bear are the external costs. The sum of
these two is the social cost.
Ref
Collective Action
Actions taken by two or more people, comprising a group or
organization, in pursuit of the same collective good—a
good such that, if any member of the group consumes it, it cannot
feasibly be withheld from the others in the group.
Ref
Commons
A scarce resource used in common, from which it is not feasible
to exclude potential beneficiaries from using or consuming it, and
for which each actor's use or consumption of it subtracts from its
availability to others.
Ref
Social Capital
1.Features of
social organizations, such as trust, norms, and networks, that can
improve the efficiency of society by facilitating coordinated actions.
2. An attribute of an individual in a social context. Social capital is
determined by a) the individual's connections - whom he/she knows,
and common group memberships, b) the strength of these ties, and c)
the resources available to these various groups. It can be acquired
partly through purposeful actions and can be transformed into
conventional economic gains.
Ref
Informal Economy
Economic actions and activities conducted outside the legal
framework of society. The activities or products may in themselves
may be legal, but they are conducted in a way which disobeys specific
legal provisions, such as registration with the government, payment
of taxes, and so on.
Ref
Corruption
Behavior which deviates from the formal duties of a public role
because of private-regarding (close family, personal, private clique)
pecuniary or status gains; or violates rules against the exercise of
certain types of private-regarding influence.
Ref
Rent-Seeking
The outlay of resources by
individuals and organizations in the pursuit of rents created by
government.
Ref
Opportunity Cost
The evaluation placed on the most highly valued of the rejected
alternatives or opportunities when a choice is made. It is the value
that is given up in order to secure the higher value
that selection of the chosen object embodies.
Ref
Path Dependence
A condition that exists when the outcome of a sequence of economic changes can be
significantly influenced by temporally remote events, including
happenings dominated by chance elements rather than systematic
forces.
Ref
Sources
(terms listed alphabetically)
Collective Action
Mancur Olson (1965), The Logic of
Collective Action: Public Goods and the Theory of Groups,
Cambridge, MA: Harvard University Press, p. 1, p. 14.
Commons
Elinor Ostrom (1990), Governing the Commons, Cambridge:
Cambridge University Press, p. 2, p. 6.
Contract
Scott E. Masten (2000),
Contractual Choice, in Encyclopedia of Law and
Economics, Volume III. The Regulation of Contracts, Boudewijn
Bouckaert and Gerrit De Geest, eds., Cheltenham:
Edward Elgar, p. 25.
Corruption
Joseph S. Nye (1967), Corruption
and Political Development: A Cost-Benefit Analysis, American
Political Science Review, 61 (2): 417-427.
Governance Structure
Eirik G.
Furubotn and Rudolf Richter (1997), Institutions and Economic
Theory: The Contribution of the New Institutional Economics, Ann
Arbor: The University of Michigan Press, p. 5.
Oliver E. Williamson (1981), The Modern Corporation, Journal of
Economic Literature 19 (4):1537-1568, p. 1544.
Informal Economy
Hernando de Soto (1989), The Other Path, New York, Harper &
Row, p. 12.
Institution
Douglass C. North (1994), Economic Performance Through Time, Nobel prize lecture, December 19, 1993.
Also published in The
American Economic Review, 84 (3): 359-368,
p. 360.
New Institutional Economics
Douglass C. North (1992),
The New Institutional Economics and Development, Washington University in St. Louis,
p.1.
John Nye (2004), personal communication.
Opportunity Cost
James M. Buchanan (1987), Opportunity Cost, in The New Palgrave: A Dictionary
of Economics, John Eatwell, Murray
Milgate, and Peter Newman, eds, London: Macmillan Press, volume 3, pp. 718-721.
Organization
Douglass North (1990), Institutions, Institutional Change and Economic Performance, Cambridge: Cambridge University Press, p. 5.
Path Dependence
Paul A. David (1985),
Clio and the Economics of QWERTY, American
Economic Review 75 (2): 332-337, p. 332.
Property Rights
Yoram Barzel (1997), Economic Analysis of Property Rights,
Cambridge: Cambridge University Press, second edition, pp. 1-2.
Thrainn Eggertsson (1990), Economic Behavior and Institutions,
Cambridge: Cambridge University Press.
Rent-Seeking
Anne O. Krueger (1974),
The Political
Economy of the Rent-Seeking Society,
The American Economic Review,
64 (3): 291-303, p. 291.
Gordon Tullock (1998),
The Fundamentals of Rent-Seeking
,
The Locke Luminary Vol. I, No. 2 (Winter 1998) Part 2.
Social Capital
Robert D. Putnam (1993), Making Democracy Work, Princeton:
Princeton University Press,
p. 167.
Pierre Bourdieu (1986), Forms of Capital, in Handbook of Theory and Research for
the Sociology of Education, John G. Richardson, ed., Westport,
CT: Greenwood Press, pp. 241–60. Discussed in
Joel Sobel (2002),
Can We Trust Social Capital?, Journal of Economic Literature 40 (1):
139–154, p. 139.
Social Cost
Ronald Coase (1960), The Problem of Social Cost, Journal of Law
and Economics 3:1-44.
Transaction
Oliver E. Williamson (1996), The Mechanisms of Governance, Oxford:
Oxford University Press, p. 379.
Transaction Costs
Eirik G.
Furubotn and Rudolf Richter (1997), Institutions and
Economic Theory: The Contribution of the New Institutional Economics,
Ann Arbor: The University of Michigan Press, p. 40.