Bài chép kinh tế thể chế

INSTITUTIONAL ECONOMICS Chapter 1: Introduction to institutional economics Chapter 2: Domains of Institutional economics Chapter 3: Agencies in Institutional economics Chapter 4: Institutions and Development Chapter 5: Further challenges and new contexts for IE Chapter 1: Introduction to IE 1. INTRODUCTION OF INSTITUTION - Concept of institutions: institutions are the rules of the game in a society or constraints that shape human interaction. (quy định của các trò chơi trong xã hội, định hình phản ứng của con người) - Example: Rules everywhere - The role of institutions: + Reducing uncertainty by providing a stucture to everyday life + Shaping human interaction, so that when we wish to greet friends on the street, drive an automobile, buy oranges,…. We know how to perform these tasks. + Structuring incentives in human exchange, wether political, social, or economic.

INSTITUTIONAL ECONOMICS

Chapter 1: Introduction to institutional economics Chapter 2: Domains of Institutional economics Chapter 3: Agencies in Institutional economics Chapter 4: Institutions and Development

Chapter 5: Further challenges and new contexts for IE

Chapter 1: Introduction to IE

1 INTRODUCTION OF INSTITUTION

- Concept of institutions: institutions are the rules of the game in a society or

constraints that shape human interaction (quy định của các trò chơi trong xã hội, định hình phản ứng của con người)

- Example: Rules everywhere

- The role of institutions:

+ Reducing uncertainty by providing a stucture to everyday life

+ Shaping human interaction, so that when we wish to greet friends on the street, drive an automobile, buy oranges,… We know how to perform these tasks.

+ Structuring incentives in human exchange, wether political, social, or economic.

- Characteristics of institutions

+ Both formal and informal

● Formal constraints: rules that human beings devise (luật lệ mà con người nghĩ ra) ● Informal constraints: conventions and codes of behavior (quy ước và quy tắc ứng

xử)

+ Institutions may be created, or they may simply evolve over time + Institutional constraints include:

● What individuals are prohibited from doing and under what conditions some individuals are permitted to undertake certain activities

● Punishment is enacted when the rules and informal codes are violated

+ Institutional change shapes the way societies evolve through time and hence is the key to understand historical change

- Kinh tế thể chế là tác động của thể chế lên các hành vi kinh tế (The impact of institution on economic behaviours)

- Institutions affect the performance of the economy by their effect on the costs of exchange and production

2 IE as a field of study

This part concentrate on the two major traditions of institutionalist thought in economics.

● The first (“old” institutional economics) is the American institutionalist tradition that began at the turn of the century and has continued uninterrupted to this day.

● The second (“new” institutional economics) is a more recent development, but can be seen as a revival and considerable expansion of the institutionalist elements to be found in classical, neoclassical, and austrian economics - Critism of the old Institutional Ecomics (OIE):

+ the oie does not represent a single well-defined or unified body of thought, methodology, or program of research

+ the oie does not appreciate the importance of unintended and evolutionary processes in institutional development

+ the oie are more interventionist, favouring greater government involvement to correct institutional failures

- About the new Institutional Ecnomics (NIE)

+ The body of thought of the NIE began simply as an attempt to extend the range of neoclassical theory

-> What was desired primarily was change in certain (microeconomic) key assumptions

-> The NIE is still an evolving field of study

+ The importance of viewing institutions as endogenous "variables" that have to be explained within the framework of the economic model

+ It no longer seems possible to justify the use of “frictionless” economic models that are based on assumptions of costless transactions (as in the Neoclassical model)

● Transaction costs (TC) is an obvious phenomenon

-> decision makers cannot be assumed to be completely informed

● R Coase did receive the Nobel Prize in Economics (1991) for his pioneering contributions related to TC

3 The analytical methods of the NIE - transaction cost economic

- property rights analysis - economic analysis of contract

* Transaction cost economics

• Transaction costs arise in connection with the exchange process

•Example: search and information costs, bargaining and decision costs, and policing

* Property-right analysis

•The system of property rights in an economic system defines the positions of individuals with respect to the use of scarce resources.

• Allocation of property rights influences incentives and human behavior and enforcement costs.

* Ecomic analysis of contract (or Contract theory)

•Contract theory deals with incentives and asymmetric information problems

→ Contract theory is considered as a "relative" of both transaction-cost economics and property rights analysis

4 Methodology in the NIE

● The "methodological" problem of the NIE

The NIE deals with complex issues owing to the complexity of social systems → It calls for analytical innovations to better understand the specificities of

dynamic social interactions, the games played by agents around rules they might decide to comply with or not

● The need to combine several methodologies

In its current state of development, the NIE still has to identify the causal relationships to be examined to check whether the theories fit the facts.

a) Case study

- To identify the most relevant regularities to be explained - the "stylized facts"- and to carry out a first test of the complex interrelation of causal relationships.

-This calls for the collection of wide sets of qualitative data 5 Experimental methodology

-Since we are dealing with human behavior, the complexity of which is still poorly taken into account in economic theories

→ experimental economics, via laboratories, is one way of improving our knowledge

- Laboratories allow the actual decision made by agents, and sometimes their motivations, to be observed It reveals how "agents" behave, with the possibility to control the parameters of the rules of the game

- It provides data for econometric models QUIZ:

1 The greatest concern of institutional economics is the constitution F (chưa đủ) 2 Institutions can be formal or informal.T

3 Institutions help reduce the risks of uncertainty in our lives T 4 Institutions regulate how we meet friends on the street T

5 The change of social forms is closely linked with institutional changes T

6 Compared with the old institutional economics, the new institutional economics has a less stable theoretical framework F oie mới là ko có well defined…

7 The main analytical tools of institutional economics are opportunity cost analysis, transaction cost analysis and human rights analysis F thiếu

8 Contracts are always expressed in terms of binding clause in written documents F 9 Methodologies for studying institutional economics are diverse T

Phân bổ quyền sử hữu có ảnh hưởng đến hành vi và động lực của con người : Đ

TRANSACTION COSTS

1 The concept of transaction

- Williamson (1985) has offered the following definition:

"A transaction occurs when a good or service is transferred across a

technologically separable Interface One stage of activity terminates and another begins"

• The term is restricted to situations in which resources are actually transferred in the physical sense of "delivery."

• It can be seen as resulting largely from the division of labor • Such delivery may occur within firms or across markets

Thus, it is possible to speak of internal and external transactions (or of intrafirm and market transactions).

- According to Commons (1934):

"Transactions are the alienation and acquisition between individuals of the rights of future ownership of physical things"

Again, the definition deals with the transfer of resources but now in the legal sense: the transfer of property rights.

Contract rights should be added to this concept

In addition to economic transactions, other "social actions" (social transaction) are also the objects of concern in the economic analysis of institutions (Weber 1968) •Actions/Transactions are necessary to establish, maintain, or change social relationships.

→Economic transactions are a special kind of social transaction • Social actions are necessary for the formation and maintenance of the institutional framework in which economic activity occurs

3 Three types of transaction costs

- the costs of using the market (market transaction costs)

- the costs of exercising the right to give orders within a firm ( managerial transaction costs)

- the costs associated with the running and adjusting of the institutional framework of a polity (political transaction costs)

3.1 Market transaction costs

- Transaction cost associates to “resource losses incurred due to imperfect information)

+ Remind: the complete absence of transaction costs (as in neoclassical models) is connected with the assumption of complete information

+ In reality, information is, of course, substantially incomplete -> There exists market uncertainty

+ No decision marker knows immediately and automatically who will buy or sell each product or under what conditions

- Market transaction costs consists fundamentally of information and bargaining costs

+ Information costs are clearly important, but the magnitude of bargaining costs should not be underestimated

- may be classified in more detail as follows:

1 the costs of preparing contracts (search and information costs)

2 the costs of concluding contracts (costs of bargaining and decision making) 3 the costs of monitoring and enforcing the contractual obligations

4 the costs of establishing and tending social relations 3.2 Managerial transaction costs

- bản chất: costs of implementing the labor contracts that exist between a firm and its employees

- can be reduced to the followings:

+ the costs of setting up, maintaining, or changing an organizational design: public relations, lobbying, investments in information technology,…

+ the costs of running an organization:

a) information costs: the costs of controlling the managers of a firm by the firm’s owners, the cost of managerial decision making, of negotiating,….

b) The costs associated with the physical transfer of goods and services across a separable interface

3.3 Political transaction costs

- market and managerial transactions are assumed to take place against a well defined political background -> this involves costs

- they are, in general sense, the costs of supplying public goods by collective action

- chia thành 2 chi phí: set up và running (like above) 4 Estimating the size of transaction costs:

- tồn tại luôn luôn trong xh

- nếu chi phí gd quá lớn thì sẽ ngăn cản các hđ kinh tế -> các thể chế xuất hiện để tối thiểu hóa các chi phí gd

- VD: bank, market, firm,… -> gọi chung là thể chế 5 Expansion of transaction cost analysis

• The institution of money has emerged in order to overcome the frictions of a barter economy.

- A barter economy is a cashless economic system in which services and goods are traded at negotiated rates

• Money was compared with a lubricant that would reduce friction (Mill 1857) - In a frictionless economy, therefore, monetary exchange would have no

advantage over barter.

- An analysis of the role of money in economic equilibrium would thus require a theory of frictions

POPERTY-RIGHT ANALYSIS

Why are property rights so important? - In a word of scarcity

+ The existence of physical objects and things -> the need to regulate among men regarding the appropration and use of things

+ Allocations of property among individuals are indisspensable

- The question of whether ownership should be private (individual) or social (collective) was and is a hotly debated issue

Property right (ownership) in classical economics (zero-transaction-cost) (tân cổ điển) - ownership is considered to be given (it is not an object of analysis )

- it does not matter wether the factors of production are owned by their users (vd nếu 1 đứa trẻ con đc phân cho 1 con bò thì làm sao nó biết chăn dẳt?) -> phê phán thứ 2 - consumers are able to determine in advance the stream of consumers goods they wish to enjoy at each moment of time

- all purchase contraccts will be honored perfectly (không phải hợp đồng nào cx phân chia 1 cách hoàn hảo, đâu cần đến chế tài, toà án, )

-In the real world, where positive transaction costs exist, the situation is quite different In our world.

● Uncertainty imperfect foresight ● Asymmetrical Information →ownership of resources matters! For example, imagine that:

It is costly to monitor a tenant under lease (or Transaction cost > 0) ● The tenant, recognizing that he is not completely constrained

● The tenant will feel free to pursue his own interests, even though his actions may affect the landlord adversely

→Private property rights (eg via a contract) help to economize on transaction costs and thus contribute to the economic welfare of society.

The Property-rights analysis: Some basic concepts

- Following Roman law, the main elements of ownership

● The right to make physical use of physical objects (us utendi) ● The right to the income from it (ius fruendi)

● The power of management, including that of alienation (chuyển nhượng) (ius abutendi)

(Full ownership comprises these three rights)

- The owner can make unlimited use of the object he owns (provided his action does not conflict with other laws or with the rights of third parties)

- Full ownership in physical objects can be fragmented or partitioned (phân chia) by transferring one or more of the three components of ownership to other persons - The value of any property exchanged depends, ceteris paribus, on the bundle of property rights that can be conveyed in the transaction

• Property-right analysis and the nature of Economics

History Thoughts

"In essence, economics is the study of property rights over scarce resources The allocation of scarce resources in a society is the assignment of rights to uses of

resources and the question of economics, or of how prices should be determined, is the question of how property rights should be defined and exchanged, and on what terms." (Alchian 1967, p.2-3)

• Property rights and markets in property rights matter.

• The market value of an asset and its allocation are "controlled" by its supply and demand.

• Individuals compete on asset markets for ownership

→The competitor is the best supervisor of the use of resources a society can find Each resource will go to the particular owner who expects the resource to yield the highest value.

Phân bổ nguồn lực có hiệu quả: giao nó cho người biết sử dụng nó nhất và làm ra lợi ích cao nhất

An efficient property regime is characterized by:

● The universality of property rights: every valuable resource were owned by someone

● The exclusivity of property rights: the power to exclude everybody else from using the resource (loại trừ người khác khỏi việc sd nguồn lực của mình) ● The transferability of property rights: ownership rights were transferable, or

alienable (quyền đc chuyển nhượng)

✓ Private ownership thus contributes, in an essential way, to the solution of the economic problem of society: the efficient use of scarce resources

● Freely transferable private property plays a fundamental role in a market economy.

Intellectual property rights:

• Ownership in immaterial rights or intellectual property rights: Involved here are copyrights (literary, artistic, musical, etc), trademarks, trade secrets, patents ● Economic interest:

✔ the services provided by intellectual works: ie, works of art or science ✔ the role of immaterial property rights in maintaining incentives to produce

intellectual works.

● The purpose of rights in the nonmaterial area is the same as that of material property rights."

• Different from material goods, some nonmaterial goods (or "knowledge") are

nonrivalrous goods: "My knowing of what you know does not lessen your knowing of the same thing”

Which of the following is correct:

1 Property-right analysis is only applied to tangible asset FALSE 2 Private ownership is always the best option of the economy FALSE

3 The state needs to own some important assets associated with national security TRUE

4 The nature of exchange in the market is the exchange of ownership TRUE 5 One of the important conditions for economic efficiency is the exclusivity of ownership TRUE

COMMON POOL RESOUCES (nguồn lực công cộng)

● We face the problem of governance and management of common pool resources (or CPRs):

● Two cases of CPRS have to be distinguished:

(1) The open-access CPR, in which no one has any property rights in the asset (e.g., in the waters of the open sea, the atmosphere.)

(2) The closed-access CPR, in which a well-defined group owns property in common (eg, communally owned alpine meadows in the Swiss, Austrian, and Bavarian Alps) Common pool resources are in danger of being overused Why??

1st scenario: the classic private ownership solution

• The common grazing ground were owned by someone who could restrict access to it • The owner would purchase just the right amount of cows to maximize his profits •However, the transaction costs related to this solution (i.e., assigning costs, monitoring costs) are too high:

•In fact, no single individual is in a position to bear full responsibility for this question 2 nd scenario: The grazing ground is owned by the villagers and each villager is free to decide whether or not to use the common field

Problem: It will be profitable for each villager to graze an additional cow as long as the output produced by the cow is greater than the cost of the cow.

● Individuals in this case ignore social cost in their calculations, namely, that each extra cow will reduce the output of milk from all of the other cows ● As a result, too many cows will be grazed on the common ground.

→This tendency toward the misallocation of resources is called the tragedy of the commons.

→Extent to open-access CPR: The "tragedy of the commons" has come to symbolize the degradation of the environment whenever many individuals use a scarce resource in common.

• Common ownership solutions may be preferable.

• Rules would have to be formulated about how many cows may graze on the village common an institutional structure.

This institutional structure takes care of appropriation, provision, monitoring enforcement, conflict resolution, and governance activities

Example: The model of communal-property institutions related to land use • Empirical evidence:

✔ Although yields are relatively low, the land in total has maintained its productivity for many centuries.

✔ Overgrazing has been prevented by tight controls:

✔ The CPR not only has been protected but also has been enhanced by

investments in weeding and manuring the summer grazing areas and by the construction and maintenance of roads.

Which of the following is correct:

1 The CPR problem is easily solved by a pure private ownership FALSE

2 CPR management by common ownership is an effective economic solution FALSE 3 CPR management by common ownership is only effective when that community has regulations on the use and management of CPR TRUE

ECONOMIC CONTRACTS THEORIES 1 Contracts

- We are dealing with property rights, though in contrast to the previous chapter, with relative property rights

- Contract = “The legal effects of promises” ● A promise is as a commitment to act later - In real life, all contracts are incomplete

● The parties to a contract do not know all possible contingencies (sự cố bất ngờ) ● It would be too costly to try to write provisions for all contingencies into a

For economists, the term contract also applies to legally nonbinding promises- which may be guaranteed by some form of social pressure or by "self enforcement."

I.e., one might expect help from friends in an emergency situation.

• Economists of the New Institutionalist School view an organization as a nexus of contracts involving the various individuals who participate in the organization 2 Basic principles of contractual obligations (nghĩa vụ hợp đồng)

Two principles of contractual obligation, together with the principle of private ownership, form the core of the principles of a free market economy:

(1) liberty of contract (quyền tự do of hđ) (2) liability from contract (trách nhiệm of hđ)

2.1 Freedom of contract/Liberty of contract

• Liberty of contract includes the freedom to: ✔ conclude a contract or not