A main instrument for better understanding the formation of institutions, and explaining the differences in their long-run development between periods and societies, would be to use history as a laboratory, allowing us to test the hypotheses developed in the social sciences. This paper discusses the study by Douglas Allen, The Institutional Revolution, in that context, in order to identify some of the pitfalls in the current attempts by economists to use historical analysis. Next, the paper places his English case into a comparative perspective, helped by the recent insights gained by economic and social history, to see how these pitfalls can be avoided. Based on this, I argue for comparisons at the regional, national and global levels, and for a multidimensional view which includes social contextualization, combined with an open eye for discontinuity in long-run patterns, in order to avoid one-dimensional and teleological approaches to institutional change.

In this article, we look into the question whether the Dutch waterboards can still be considered resilient institutions, effectively adapting to changing circumstances as often described in literature. We argue that current waterboards resemble the CPR management form of old only in name. Their institutional nature has changed considerably, thus providing a challenge to the future of CPR water management in the Netherlands. We examine not only the implications for the institutional performance and future of the waterboard system but also discuss possible ways to regenerate the system. With respect to the latter (changes in), the system of governance and community base character of waterboards are examined.

Ex-ante impact assessment of agricultural, environmental, and rural policies has become an integral part of political decision-making processes in the European Union. While a variety of agri-environmental modelling tools exists, ex-ante policy assessment tools capturing the institutional dimension are rare and need to be improved. In this paper, we introduce a standardized procedure for ex-ante modelling institutional aspects for policy implementation: the ‘Procedure for Institutional Compatibility Assessment’ (PICA). PICA has been designed as an explorative and flexible, yet formalized methodology that enables policy-makers to identify, at an early stage, potential institutional incompatibilities. After relating PICA to relevant approaches for policy assessment, we elaborate on its four distinct steps, use a core element of the EU Nitrate Directive to illustrate its function, and then provide model validation by means of a test case.

Scholars across the social sciences have debated whether resource dependence curses or blesses national development prospects, with a growing consensus on mixed outcomes and the centrality of institutions. Mainstream literature, however, falls short in depicting what the resource curse entails: the claim that “institutions matter” usually has a narrow meaning that largely overlooks the significance of place. A review of the paved road in research reveals a need to critically integrate approaches to studying the curse, as well as more insightful research on which institutions matter, how, and where. Expounding six governance challenges and thirteen development traps, I set out a simple yet crucial lesson: resource-based development presents both blessings and curses for any given resource-rich country in any given time period, and institutions are likely to be part of the explanation. I sketch how a “context matters” framework could guide future research, with illustrations from the Latin American experience.

We make a distinction between centralized, decentralized, and distributed payment mechanisms. A centralized payment mechanism processes a transaction using a trusted third party. A decentralized payment mechanism processes a transaction between the parties to the transaction. A distributed payment mechanism relies on the network of users to process a transaction on a shared ledger. We maintain that bitcoin is neither a centralized nor a decentralized payment mechanism. It is, instead, a distributed payment mechanism. We then consider decentralized and centralized aspects of the broader bitcoin payment space.

Electric power sectors around the world have changed dramatically in the last 25 years as a result of sector liberalization policies. Many electricity sectors are now pursuing deep decarbonization goals which will entail replacing dispatchable fossil generation primarily with intermittent renewable generation (wind and solar) over the next 20–30 years. This transition creates new challenges for both short-term wholesale market design and investment incentives consistent with achieving both decarbonization commitments and security of supply criteria. Thinking broadly about the options for institutional change from a Williamsonian perspective – thinking like Williamson – provides a useful framework for examining institutional adaptation. Hybrid markets that combine ‘competition for the market’ that relies on competitive procurement for long-term purchased power agreements with wind, solar, and storage developers, ideally in a technology neutral fashion, and ‘competition in the market’ that relies on short-term markets designed to produce efficient and reliable operations of intermittent generation and storage, is identified as a promising direction for institutional adaptation. Many auction, contract, and market integration issues remain to be resolved.

Institutional economists have analyzed permissionless blockchains as a novel institutional building block for voluntary economic exchange and distributed governance, with their unique protocol features such as automated contract execution, high levels of network and process transparency, and uniquely distributed governance. But such institutional analysis needs to be complemented by polycentric analysis of how blockchains change. We characterize such change as resulting from internal sources and external sources. Internal sources include constitutional (protocol) design and collective-choice processes for updating protocols, which help coordinate network participants and users. External sources include competitive pressure from other cryptocurrency networks. By studying two leading networks, Bitcoin and Ethereum, we illustrate how conceptualizing blockchains as competing and constitutional polycentric enterprises clarifies their processes of change.

Analyses of climate adaptation seldom rely on the conceptual toolbox of institutional economics. Yet articles addressing institutions make up a large portion of the climate adaptation literature. With a wealth of institutionally relevant knowledge in the adaptation literature, organizing such knowledge in institutionally meaningful ways can advance the present understanding of the link between institutions and adaptation. Knowing which aspects of this link are well researched, and where in contrast research gaps lie, can provide guidance to institutional economists interested in adaptation. We contribute to this through a systematic review of the adaptation literature, assessing the consideration adaptation scholars give to different elements of the Institutional Analysis and Development framework. Results show a strong focus on collective choice and on adaptation by public actors, with an emphasis on rules in use, social interactions and, to a lesser extent, attributes of the community. Research gaps rather encompass operational and constitutional choice, private adaptation, physical interactions and biophysical conditions.

This paper addresses the issue of how rules are conceptualized by Hodgson in Old Institutional Economics (OIE). The argument is put forward that the concept of rules can be constructively clarified. Rather than provide a general form of single rules within a rule system, we argue for a taxonomic range of single rule forms. This approach has the additional advantage of providing a more explicit account of how rules operate as part of a rule system. It also provides one way to address the fluidity of rules. Rules are understood to be more or less fluid (incomplete) and subject to a practical dynamism. This, we argue, can be differentiated from the idea of tendency based on the capacity of agents not to follow rules. A useful concept here is that of ‘mezzo rules’ or recodifications that both define the rule and distance the agent from their own rule-following behaviour. In pursuing the argument we also highlight various methodological implications. First, conceptual development is a key aspect of the OIE, particularly when it is located within Dow's structured pluralism. As such elaboration on rule forms enhances the consistency of OIE as methodology. Second, the exploration of a taxonomic range of rules and of forms of fluidity can provide useful resources in mapping out institutional processes in real research.

In his article on measuring institutions, Stephan Voigt (2012) proposes a pragmatic approach to develop more concrete, objective institutional variables than the broad abstractions used in most cross-country growth regressions. Voigt's approach has important strengths, but cross-country growth regressions, even with precisely measured institutions, are less likely to yield new insights than other methodologies.

The exploitation of radio-electric spectrum bands for wireless transmission purposes has some features of the commons: it is subject to congestion and conflict without rules governing its use. The Coasean approach is to assign private property rights to overcome the tragedy of the spectrum commons. The process of assigning these rights is still centralized, with governments assigning property rights through agencies such as the Federal Communications Commission and National Telecommunications and Information Administration in the USA. We consider the possibility of self-governance of the spectrum. We use insights from the study of common pool resources governance to analyze the emergence of property rights to spectrum in a ‘government-less’ environment in which norms, rules, and enforcement mechanisms are solely the product of the repeated interactions among participants in the network. Our case study considers the spectrum-sharing arrangement in the 1,695–1,710 MHz band. Using agent-based modeling (ABM), we show that self-governance of the spectrum can work and under what conditions it is likely to improve the efficiency of the allocation of property rights.

I use matched county pairs on either side of US state borders to investigate the causal effects of the Economic Freedom of North America index (EFNA) on local outcomes. This method is similar to Dube et al. (2010). I construct a panel of county pairs running from 1981–2012 and four measures of outcomes, logged real incomes, logged real per capita incomes, employment, and logged real wages, employing single year and five year differences-in-differences. I find small, but precisely estimated, effects on incomes but mixed effects on wages and employment. All regressions show low R 2. This supports the hypothesis that state-level economic freedom improves capital income or that it attracts capital income across state borders.

Geoffrey Hodgson has a number of criticisms regarding the ‘economic approach to property rights’ that has been mostly championed by members of the UCLA and Washington departments of economics during the 1960s–1990s. In this short note I address these comments and point out that most are simply a matter of nomenclature. When there are disagreements they stem from Hodgson’s failure to account for positive transaction costs and this literature’s emphasis on operational explanations of organization.

A rough balance of political power between monarchs and a militarized landed aristocracy characterized medieval Western Europe. Scholars have argued that this balance of power contributed to a tradition of limited government and constitutional bargaining. I argue that 5th- and 6th-century barbarian settlements created a foundation for this balance of power. The settlements provided barbarians with allotments of lands or taxes due from the lands. The allotments served to align the incentives of barbarian warriors and Roman landowners, and realign the incentives of barbarian warriors and their leadership elite. Barbarian military forces became decentralized and the warriors became political powerful shareholders of the realm.

Entrepreneurial action takes place in a context of Knightian uncertainty. In order to overcome this uncertainty, entrepreneurs engage in a process of judgment resulting in a decision about the course of action. Institutions arise mainly to reduce economic friction by providing structure to human interaction and thus reducing uncertainty. However, institutions may also introduce further uncertainty and thus disrupt the judgment process preceding entrepreneurial action. The present paper builds upon recent efforts to integrate the concepts of uncertainty and institutions within the entrepreneurial context. Drawing on Frank H. Knight's seminal insight, the judgment-based view of entrepreneurship, and relevant concepts of entrepreneurial outcomes, the main contribution of the paper lies in the development of a model offering a coherent description of the way institutions affect uncertainty and the entrepreneurial process.

We test the effect of institutional quality on capital structure in the microfinance setting. In doing this, we rely on data from 532 microfinance institutions (MFIs) located in 73 countries dotted across the six microfinance regions in the world. We observe that institutional quality exhibits a robust negative and statistically significant relationship with capital structure in both the short and long run, implying that MFIs in countries with a better institutional environment are less likely to utilize more debt. Our moderation analysis furnishes us with evidence that the presence of women on the board of an MFI significantly moderates the relationship between institutional quality and its capital structure. We show that in the presence of more female representation on the boards of MFIs, the tendency of MFIs using less debt is higher.

The decline of agriculture in Taiwan has adversely affected the incentives of farmers and the government to engage in irrigation management. Despite that, Taiwan's irrigation systems have shown a high degree of robustness. This study seeks to understand how institutions have contributed to the robustness of Taiwanese irrigation. Conceptualizing an irrigation system as a social-ecological system (SES), this study examines the development and design of Taiwanese irrigation institutions, and how these institutions have enabled farmers and irrigation managers to cope with the dynamics in the SES, and hence contributed to the system's robustness.

The study has found that the robust systems are built upon institutions that allow effective coordination of the activities of a multitude of farmers, enhance the development and sustenance of a repertoire of ideas, and nest the problem-solving efforts of various scopes and scales in a complementary manner. The institutions enable individuals and organizations at different levels to engage in continuous learning and adaptation that, in turn, facilitates the systems' adaptation to the changing environment.

In this paper, we revisit the relationship between economic freedom and growth across 407 German districts (Kreise). We build six indicators of economic freedom and cluster them into categories reflecting tax rates and size of the government and public sector. Exploiting the variation in the constructed indices of economic freedom, the evidence suggests less indebted districts with a lower share of taxes and a relatively smaller public sector achieve consistently higher growth rates and income levels. The beneficial effect of economic freedom on growth is robust to the variety of specification checks and does not appear to be driven by sample selection. The evidence does not indicate a lower level of economic freedom in former East German districts or greater economic freedom in West German districts but unveils a persistent north–south divide in the post-unification period. In the counterfactual scenario, a transition to the 90th percentile of economic freedom is associated with large income and growth gains. Such a transition would yield higher income levels and growth rates with a notable decrease in regional economic inequality within Germany.

Legal scholars, economists and other social scientist often refer to the idea that countries can be classified into a number of ‘legal families’ or ‘legal origins’. Yet, this research is unsatisfactory as regards the actual classifications of the legal systems of the world. It is the aim of this paper to fill this gap and to develop a more robust taxonomy of legal systems. This taxonomy is based on a new dataset of 156 countries that is subsequently analysed with tools of network analysis. Applying cluster optimisation, this paper finds that the world's legal systems can be divided into four clusters. It displays those clusters in a map, akin to the Inglehart–Welzel cultural map. It is suggested that those findings have important implications, not only for our understanding of the legal world, but also for the feasibility of legal transplants and harmonisation.

The absence of democracy in the Arab–Muslim world is a ‘striking anomaly’ for democratization scholars. This cannot be seen as caused by religion as such, as there are now several democratic Muslim-majority states. Popular explanations such as values, culture, economic development, natural resources, or colonial legacy have been refuted. Based on Ostrom's approach regarding local groups’ ability to establish institutions for ‘governing the commons’, we present a novel explanation for this puzzle, based on historical variations in institutions for financing religion. In Northwestern Europe, religion and secular services managed by local religious institutions have been financed ‘from below’, creating local systems for semi-democratic representation, transparency, and accountability. In the Arab–Muslim region, religion and local secular services have been financed ‘from above’, by private foundations lacking systems for representation and accountability. It is thus not religion, but how religion has been financed, that explains lacking successful democratization in the Arab–Muslim world.