[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v79y2011i1p65-79.html
   My bibliography  Save this article

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

Author

Listed:
  • 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.

Suggested Citation

  • Brousseau, Eric & Raynaud, Emmanuel, 2011. "“Climbing the hierarchical ladders of rules”: A life-cycle theory of institutional evolution," Journal of Economic Behavior & Organization, Elsevier, vol. 79(1), pages 65-79.
    • Handle: RePEc:eee:jeborg:v:79:y:2011:i:1:p:65-79
    DOI: 10.1016/j.jebo.2011.01.027
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268111000588
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2011.01.027?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alberto Alesina & Enrico Spolaore, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1027-1056.
    2. 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, vol. 2(1), pages 1-23, March.
    3. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 42-60, February.
    4. Sidney G. Winter, 1964. "Economic "Natural Selection" and the Theory of the Firm," LEM Chapters Series, in: Yale Economic Essays, pages 225-272, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Axelrod, Robert, 1986. "An Evolutionary Approach to Norms," American Political Science Review, Cambridge University Press, vol. 80(4), pages 1095-1111, December.
    6. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    7. 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.
    8. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-337, May.
    9. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change," Introductory Chapters, in: Understanding the Process of Economic Change, Princeton University Press.
    10. Brousseau, Eric & Schemeil, Yves & Sgard, Jérôme, 2010. "Bargaining on law and bureaucracies: A constitutional theory of development," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 253-266, September.
    11. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
    12. repec:hal:spmain:info:hdl:2441/4vc7skecu3q7u7s984pgpg64m is not listed on IDEAS
    13. Geroski, P. A., 2000. "Models of technology diffusion," Research Policy, Elsevier, vol. 29(4-5), pages 603-625, April.
    14. 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.
    15. Kingston, Christopher, 2007. "Marine Insurance in Britain and America, 1720–1844: A Comparative Institutional Analysis," The Journal of Economic History, Cambridge University Press, vol. 67(2), pages 379-409, June.
    16. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    17. North,Douglass C. & Wallis,John Joseph & Weingast,Barry R., 2013. "Violence and Social Orders," Cambridge Books, Cambridge University Press, number 9781107646995.
    18. Wallace E. Oates & Wallace E. Oates, 2004. "An Essay on Fiscal Federalism," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 22, pages 384-414, Edward Elgar Publishing.
    19. Liebowitz, S J & Margolis, Stephen E, 1995. "Path Dependence, Lock-in, and History," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(1), pages 205-226, April.
    20. repec:dau:papers:123456789/7098 is not listed on IDEAS
    21. Greif,Avner, 2006. "Institutions and the Path to the Modern Economy," Cambridge Books, Cambridge University Press, number 9780521671347.
    22. 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, vol. 21(1), pages 115-157, January.
    23. Gillian K. Hadfield, 2004. "Delivering Legality on the Internet: Developing Principles for the Private Provision of Commercial Law," American Law and Economics Review, American Law and Economics Association, vol. 6(1), pages 154-184.
    24. repec:dau:papers:123456789/13245 is not listed on IDEAS
    25. repec:hal:wpspec:info:hdl:2441/4vc7skecu3q7u7s984pgpg64m is not listed on IDEAS
    26. Pirrong, Stephen Craig, 1995. "The Efficient Scope of Private Transactions-Cost-Reducing Institutions: The Successes and Failures of Commodity Exchanges," The Journal of Legal Studies, University of Chicago Press, vol. 24(1), pages 229-255, January.
    27. Sidney G. Winter, 1971. "Satisficing, Selection, and the Innovating Remnant," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(2), pages 237-261.
    28. Masahiko Aoki, 2001. "Toward a Comparative Institutional Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011875, April.
    29. Broz, J. Lawrence, 1999. "Origins of the Federal Reserve System: International Incentives and the Domestic Free-rider Problem," International Organization, Cambridge University Press, vol. 53(1), pages 39-70, January.
    30. Eric Brousseau, 2004. "Property rights on the internet: is a specific institutional framework needed?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(5), pages 489-507.
    31. 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, vol. 4(1), pages 15-22, June.
    32. Banner, Stuart, 1998. "The Origin of the New York Stock Exchange, 1791-1860," The Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 113-140, 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


    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. 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.
    3. 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.
    4. 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).
    5. 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.
    6. 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.
    7. 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.
    8. Miranda, Bruno Varella & de Oliveira, Gustavo Magalhães, 2023. "Assessing the performance of voluntary environmental agreements under high monitoring costs: Evidence from the Brazilian Amazon," Ecological Economics, Elsevier, vol. 214(C).
    9. 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.
    10. 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.
    11. 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.
    12. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    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. Kiwit Daniel, 1996. "Path-Dependence In Technological And Institutional Change – Some Criticisms And Suggestions," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 7(1), pages 69-94, March.
    3. Vanberg, Margit A., 2005. "Network Externalities and Interconnection Incentives," ZEW Discussion Papers 05-80, ZEW - Leibniz Centre for European Economic Research.
    4. Brousseau, Eric & Schemeil, Yves & Sgard, Jérôme, 2010. "Bargaining on law and bureaucracies: A constitutional theory of development," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 253-266, September.
    5. Marechal, Kevin, 2007. "The economics of climate change and the change of climate in economics," Energy Policy, Elsevier, vol. 35(10), pages 5181-5194, October.
    6. Jin, Wei, 2021. "Path dependence, self-fulfilling expectations, and carbon lock-in," Resource and Energy Economics, Elsevier, vol. 66(C).
    7. repec:hal:wpspec:info:hdl:2441/4vc7skecu3q7u7s984pgpg64m is not listed on IDEAS
    8. Scott E. Masten & Jens Prüfer, 2014. "On the Evolution of Collective Enforcement Institutions: Communities and Courts," The Journal of Legal Studies, University of Chicago Press, vol. 43(2), pages 359-400.
    9. Dosi, Giovanni & Nelson, Richard R., 2010. "Technical Change and Industrial Dynamics as Evolutionary Processes," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 51-127, Elsevier.
    10. Heli Koski & Tobias Kretschmer, 2004. "Survey on Competing in Network Industries: Firm Strategies, Market Outcomes, and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 5-31, March.
    11. Ruttan, Vernon W., 1996. "Sources Of Technical Change: Induced Innovation, Evolutionary Theory And Path Dependence," Bulletins 12974, University of Minnesota, Economic Development Center.
    12. Jin, Wei & Zhang, ZhongXiang, 2015. "Levelling the Playing Field: On the Missing Role of Network Externality in Designing Renewable Energy Technology Deployment Policies," Climate Change and Sustainable Development 208433, Fondazione Eni Enrico Mattei (FEEM).
    13. Choi, Young Back, 2008. "Path dependence and the Korean alphabet," Journal of Economic Behavior & Organization, Elsevier, vol. 65(2), pages 185-201, February.
    14. Roman Beck & Daniel Beimborn & Tim Weitzel & Wolfgang König, 2008. "Network effects as drivers of individual technology adoption: Analyzing adoption and diffusion of mobile communication services," Information Systems Frontiers, Springer, vol. 10(4), pages 415-429, September.
    15. Calcei Didier, 2000. "Winners, Losers and Microsoft. Competition and Antitrust in High Technology: Stan J. Liebowitz & Stephen E. Margolis," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 10(1), pages 197-206, March.
    16. Teodor Sedlarski, 2012. "Institutional strengthening of the free market in the new economic history," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 83-109.
    17. Gagliardi, Francesca, 2008. "Institutions and economic change: A critical survey of the new institutional approaches and empirical evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 416-443, February.
    18. repec:dau:papers:123456789/13244 is not listed on IDEAS
    19. Slowak, André P., 2009. "Market fields structure & dynamics in industrial automation," FZID Discussion Papers 02-2009, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    20. repec:hal:spmain:info:hdl:2441/4vc7skecu3q7u7s984pgpg64m is not listed on IDEAS
    21. Puffert, Douglas J., 2002. "Path Dependence in Spatial Networks: The Standardization of Railway Track Gauge," Explorations in Economic History, Elsevier, vol. 39(3), pages 282-314, July.
    22. Khalil, Elias L., 2013. "Lock-in institutions and efficiency," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 27-36.
    23. repec:spo:wpmain:info:hdl:2441/4vc7skecu3q7u7s984pgpg64m is not listed on IDEAS
    24. Carrillo-Hermosilla, Javier, 2006. "A policy approach to the environmental impacts of technological lock-in," Ecological Economics, Elsevier, vol. 58(4), pages 717-742, July.

    More about this item

    Keywords

    Bargaining power; Clubs; Core members; Institutional framework; Institutional evolution; Institutional layers; Marginal members; Network externalities; Order;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:79:y:2011:i:1:p:65-79. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.