Friday, March 25, 2005

Institutional entrepreneurs

Google Scholar cites 1,730 links to "Coase Theorem" but only 37 to "Institutional Entrepreneur", an economic agent celebrated in Anderson and Hill's The Not So Wild, Wild West, which I have cited admiringly before.

Much has been written on what we should really get from the Coase Theoreom (or from the Prisoners' Dilemma, or from the Tragedy of the Commons, etc.). The most important take-away has to be about the remedial actions that are prompted, ones that expand property rights and exchange, usually by finding ways to lower transactions costs. These typically have profound welfare implications.

I enjoy growth theories that endogenize technological change. Again, we will long wonder what took so long? But even better is history through the prism of entrepreneurial actions with profound welfare consequences. Entrepreneurs that bring iPods and Blackberrys to market are to be admired but those that conceive and develop new property arrangements to overcome Prisoners Dilemma problems are even more attractive.

A similar class of heroes are those that develop technologies that overcome state-sanctioned monopolies. Satellite dishes sprouting in Third World backwaters give people new information options. Closer to home, I will soon replace cable with a satellite dish, overcoming the cozy arrangement hatched between local cable operators and the local city council.