Institutional Design

Policy scientists have long been concerned with understanding the basic tools, or instruments, that governments can use to accomplish their goals. The initial interest in inductively developing comprehensive lists of generic instruments for policy analysi

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Recent Economic Thought Series Editors: Warren J. Samuels Michigan State University East Lansing, Michigan, USA

William Darity, Jr. University of North Carolina Chapel Hill, North Carolina, USA

Other books in the series: Mercuro, N. Taking Property and Just Compensation de Marchi, N. Post-Popperian Methodology of Economics Gapinski, J. The Economics of Saving Darity, W. Labor Economics: Problems in Analyzing Labor Markets Caldwell, B. and Boehm, S. Austrian Economics: Tensions and Directions Tool, Marc R. Institutional Economics: Theory, Method, Policy Babe, Robert E. Information and Communication in Economics Magnusson, Lars Mercantilist Economics Garston, Neil Bureaucracy: Three Paradigms Friedman, James W. Problems of Coordination in Economic Activity Magnusson, Lars Evolutionary and Neo-Schumpeterian Approaches to Economics Reisman, D. Economic Thought and Political Theory Burley, P. and Foster, J. Economics and Thermodynamics: New Perspectives on Economic Analysis Brennan, H.G. and Waterman, A.C. Economics and Religion: Are They Distinct? Klein, Philip A. The Role of Economic Theory Semmler, Willi Business Cycles: Theory and Empirics Little, Daniel On the Reliability of Economic Models: Essays in the Philosophy of Economics

Institutional Design edited by David L. Weimer University of Rochester and Lingnan College, Hong Kong

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Springer Science+Business Media, LLC

Library of Congress Cataloging-in-Publication Data Institutional design/edited by David L. Weimer. p. cm. -(Recent economic thought series) Includes index. ISBN 978-94-010-4279-6 ISBN 978-94-011-0641-2 (eBook) DOI 10.1007/978-94-011-0641-2 1. Policy sciences. 2. Institution building. 1. Weimer, David Leo. II. Series. H97.154 1995 363-dc20

94-33744 CIP

© 1995 by Springer Science+Business Media New York Originally published by Kluwer Academic Publishers in 1995 Softcover reprint of the hardcover 1st edition 1995

Copyright

AII rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any torm or by any means, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the publisher. Springer Science

+Business Media, LLC Printed on acid-free paper.

CONTENTS

Contributing Authors Preface

vii ix

Institutional Design: Overview David L. Weimer

2

The Design of Institutions: An Agency Theory Perspective Jeffrey S. Banks 3 Caveat Emptor: Institutions, Contracts, and Commodity Exchanges in Russia

17

37

Timothy Frye

4 The Rational Choice Theory of Institutions: Implications for Design

63

5 Conventions and Norms in Institutional Design

95

Randall L. Calvert

Patrick Croskery

6 Institutions for the Settlement of Trade Disputes: The Case of the Canada-United States Free Trade Agreement Kenneth B. Woodside 7 The Two Traditions of Institutional Designing: Dialogue Versus Decision? Stephen H. Linder and B. Guy Peters

113

133

vi

CONTENTS

8

Policy Networks and Governance Johan A. de Bruijn and Ernst F. ten Heuvelhof

161

Author Index

181

Subject