Institutional analysis of public goods production

TERRA ECONOMICUS, , Vol. 11 (no. 1.1),
p. 65-80

The problem of the public goods production, along with the issues related to the degree and conditions of treating the institutions as the formal and informal rules of behavior in the form of public goods are investigated in the article. The situation called an «investment trap» which occurs in the process of operation of both newly introduced and ongoing institutions is defined; the ways of overcoming of an «investment trap» by the means of institutional planning are described. The conditional model of connections between the public goods (or institutions) production and the price level is presented by the author. The model shows that, in simple case of linearly increasing returns, the number and the constitution of institutions, as well as their effectiveness (or level of dysfunction) are able to cause appreciable influence on price dynamics within the economic system.

Keywords: institutions; the public good; «investment trap»; dysfunction; private property right

  • Coase R. (1988). The Firm, the Market and the Law. Chicago and L.: University of Chicago Press (Russian ed.: Coase R. (1993). Firma. Rynok. Pravo. Moscow: Delo Publ.)
  • Coase R. (2000). An Interview at the Inaugural Conference of the International Society for New Institutional Economics. St. Louis, 17 September, 1997. Kvartalniy bulleten kluba ekonomistov, issue 4. Minsk: Propilen Publ., 28 p. (In Russian).
  • North D. (1997a). Institutions, institutional change and economic performance. Moscow: The «Nachala» Fund Publ. (In Russian).
  • North D. (1997b). Institutional change: a framework of analysis. Voprosy ekonomiki, no. 3, p. 6–17. (In Russian).
  • Nureev R.M. (2008). Development economics: the market economy making models. Moscow: INFRA-M. (In Russian).
  • Nureev R.M. (2010). Essays on the history of institutionalism. Rostov-on-Don: «Sodeystvie – XXI vek» Fund Publ.; Gumanitarnye perspektivy Publ. (In Russian).
  • Nureev R.M. (2011). Genesis of capitalism: the function of the entrepreneurship-promoting institutions. TERRA ECONOMICUS, vol. 9, no 4, p. 122–141. (In Russian).
  • Olson M. (1965). The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge, MA: Harvard University Press(Russian ed.: Olson M. (1995). Logika kollektivnykh deystviy. Obshchestvennye blaga i teoriya grupp. Moscow: Fond ekonomicheskoy initsiativy.)
  • Popov E.V. (2012). Transactions. Ekaterinburg: Institute of Economics, Ural Branch of the Russian Academy of Sciences Publ. (In Russian).
  • Sukharev O.S. (2001a). Institutional theory and economic policy. Book 1. Institutional theory. The methodological essay. Moscow: Institute of Economics of the Russian Academy of Sciences Publ. (In Russian).
  • Sukharev O.S. (2001b). The theory of economic dysfunction. Moscow: Mashinostroenie Publ. (In Russian).
  • Sukharev O.S. (2012). The evolutionary economics. Institutions – structure, crises – growth, technology – effectiveness. Moscow: Finansy I statistika, 800 p. (In Russian).
  • Tullock G. (2011). Public Goods, Redistribution and Rent Seeking. Moscow: E.T. Gaidar Institute Publ. 224 p. (In Russian).
  • Furubotn E.G. and Richter R. (2000). Institutions and Economic Theory. The Contribution of the New Institutional Economics. The University of Michigan Press: Ann Arbor (Russian ed.: Furubothn E. and Richter R. (2005). Instituty I ekonomicheskaya teoriya. Dostizheniya novoy institutsionalnoy ekonomicheskoy teorii. Saint-Petersburg: Saint Petersburg State University Publ.)
  • Hodgson J. (2003). Economic theory and institutions. Moscow: Delo Publ., 464 p. (In Russian).
  • North D. (1981). Structure and Change in Economic History. N.Y.: W.W. Norton.
Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606