The contractual, single-exchange framework in Coase (1960) contains the implicit assumption that exchange in property rights does not affect future transaction (i.e., trading) costs. This is pertinent for analyzing use externalities but limits our understanding of property institutions: A central problem of property markets lies in the interaction among multiple transactions, which causes exchange-related and non-contractible externalities. By retaining a single-exchange simplification, the economic analysis of property has encouraged views that: overemphasize the initial allocation of property rights, while some form of recurrent allocation is often needed; pay scant attention to legal rights, although these determine enforceability and, therefore, economic value; and overestimate the power of unregulated private ordering, despite its inability to protect third parties. These three biases have been a misleading policy in many areas, including land titling and business firm formalization.

Benito Arrunãda's paper on the transaction cost problems involved with land, provides an excellent explanation of land legal institutions. This explanation revolves around the fact that land exists through time, and that various exchanges made with respect to land at one time affect exchanges in other times. Arrunãda refers to this as ‘sequential exchange’, and he argues that sequential exchange provides the explanation for state involvement in titling and the default nature of in rem rights. Unfortunately, Arrunãda frames his argument with an inappropriate notion of transaction costs. This creates a confusing language, and a faulty interpretation of Coasean logic. Reframing the first sections of his paper using the ‘property rights’ definition of transaction costs brings brevity and clarity to the ultimate point he is trying to make.

Coase's (1960) contractual single-exchange framework is challenged by Arruñada (2017) as a framework that cannot be used to understand the complex nature of property law and related institutions. Arruñada proposes the sequential exchange model as an alternative framework. Differences between the two approaches are considered and some applications in land and natural resources are used to evaluate his critique. These cases support Arruñada's critique of the simple contracting approach to property, showing that for many natural resources private contracting has not been the solution and that a mix of property institutions govern. Contrary to Arruñada, however, I argue that the limits of the single-exchange framework arise not because of sequential exchange, but because assets (parcels of land) are complex and physically connected.

In his rich contribution, Arruñada (2017) debates what institutions are needed to enforce complex ‘sequential’ transactions embedded in interdependent private contracts, and more specifically discusses the conditions of their efficiency when it comes to transferring property. Beyond acknowledging the importance of this issue and the very stimulating and often counterintuitive ideas developed in the paper, this short note challenges some of the positions adopted by Arruñada, particularly regarding the relevance of ‘The problem of social cost’ (Coase, 1960) for dealing with this issue. It also raises questions about the institutional, hybrid arrangement advocated as the solution for dealing with sequential transactions.

In his important article, Benito Arruñada draws out the significance of sequential exchange for property rights and traces inadequacies in the economics of property rights to its overly contractual focus, to the exclusion of multiple transactions on the same asset. In this comment, I argue that although Arruñada's problem is a genuine one, it is part of a larger inadequacy in the economic analysis of property rights: property institutions have to manage complexity stemming from many kinds of interactions, making it problematic to focus solely on local interactions. Modular structures in property, including legal ‘things’ themselves, serve to manage this complexity. The larger problem of complexity allows us to set sequential exchange in its proper context.

Inspired by comments made by Allen (2017), Lueck (2017), Ménard (2017) and Smith (2017), this response clarifies and deepens the analysis in Arruñada (2017a). Its main argument is that to deal with the complexity of property we must abstract secondary elements, such as the physical dimensions of some types of assets, and focus on the interaction between transactions. This sequential-exchange framework captures the main problem of property in the current environment of impersonal markets. It also provides criteria to compare private and public ordering, as well as to organize public solutions that enable new forms of private ordering. The analysis applies the lessons in Coase (1960) to property by not only comparing realities but also maintaining his separate definition of property rights and transaction costs. However, it replaces his contractual, single-exchange, framework for one in which contracts interact, causing exchange externalities.

Elinor Ostrom's Institutional Analysis and Development (IAD) framework has been described as ‘one of the most developed and sophisticated attempts to use institutional and stakeholder assessment in order to link theory and practice, analysis and policy’. But not all elements in the framework are sufficiently well developed. This paper focuses on one such element: the ‘rules-in-use’ (a.k.a. ‘rules’ or ‘working rules’). Specifically, it begins a long-overdue conversation about relations between formal legal rules and ‘working rules’ by offering a tentative and very simple typology of relations. Type 1: Some formal legal rules equal or approximate the working rules; Type 2: Some legal rules plus (or emended by) widely held social norms equal or approximate the working rules; and Type 3: Some legal rules bear no evident relation to the working rules. Several examples, including some previously used by Ostrom, are provided to illustrate each of the three types, which can be conceived of as nodes or ranges along a continuum. The paper concludes with a call for empirical research, especially case studies and meta-analyses, to determine the relevant scope of each of these types of relations, and to provide data for furthering our understanding of how different types of rules, from various sources, function (or not) as institutions.

This paper reports an experiment in which participants were allowed an hour to find the cheapest mobile phone plan for a specific usage remit and were given either (a) access to an offline archive of provider websites or (b) access to the Internet. They were required to think aloud, and recordings were made of what they said and what transpired on their computer screens. Access to comparison sites and other market institutions resulted in significantly cheaper plans being selected on average. Within the group of online subjects, excess costs of recommended plans were inversely related to the time spent using market institutions. Although the designs of comparison websites sometimes hampered decision making, outcomes were generally enhanced by the ability to use these online market institutions.

Hurricane Sandy hit the East Coast of the United States on 29 October 2012, flooding hundreds of thousands of homes and costing over $50 billion in property damage. After Hurricane Sandy residents and communities required food, water and clothing, and in the weeks and months following, there was demand for cleaning supplies, building materials and contracting services. Polycentric orders, because of their flexibility and access to local knowledge, are well suited to respond to the challenges of disaster. We highlight the importance of privately provided social services within polycentric orders and illustrate that the private provision of these services was important to post-disaster recovery in the Orthodox Jewish community in the Rockaway Peninsula in New York.

Not only do ideas matter in economic development but so do the institutions of intellectual debates in which ideas are formed. Scholars usually point to intellectual debates whose institutions are largely exogenous to the economy (e.g. those of religion or science). I suggest that economists should also consider intellectual debates that are initiated by economic actors. I set out to understand the role of intellectual debate in the economy and, drawing on Polanyi's concept of ‘intellectual order’, the institutions that emerge endogenously to support it. Professional communities and public intellectual spheres are shown as the most important examples. Three historical cases are given as illustrations. I conclude that these intellectual orders should be included among the fundamental ‘institutions of capitalism’, along with the catallactic institutions of property and contract.

Although firms use various strategies to try to influence government policy, with lobbying and corruption chiefly among them, and political institutions play an important role in determining policy choices, very little research has been devoted to these topics. This paper tries to fill this gap. Using cross-country enterprise-level data, it investigates (1) the effect of a key political institution, namely electoral rules, on the probability that a firm engages in lobbying activities and (2) the impact of lobbying on influence, accounting for corruption and political institutions. The main conclusion is that lobbying is a significantly more effective way of generating political influence than corruption, and that electoral rules are a key mediating political institution. Our baseline estimate is that the probability of influencing government policy is 16% higher for firms that are members of lobbying groups than for those firms that are not.