Co-Production, Polycentricity, and Value Heterogeneity: The Ostroms’ Public Choice Institutionalism Revisited

Abstract

Revisiting the theory of institutional hybridity and diversity developed by Vincent and Elinor Ostrom to cope with the challenge of the “neither states nor markets” institutional domain, this article reconstructs the Ostromian system along the “value heterogeneity–co-production–polycentricity” axis. It articulates the elements of a theory of value heterogeneity and of the fuzzy boundaries between private and public. It rebuilds the model of co-production, clarifying the ambiguity surrounding a key technical public choice theoretical assumption, and it demonstrates (a) why it should not be confused with the Alchian-Demsetz team production model and (b) how co-production engenders a type of market failure that has been neglected so far. In light of this analysis, the article reconsiders polycentricity, the capstone of the Ostromian system, explaining why polycentricity may be seen as a solution both to this co-production market failure problem and to the problems of social choice in conditions of deep heterogeneity. It also discusses further normative corollaries.

Understanding the role of values in institutional change: the case of the energy transition

“…In general, values can be defined as fundamental normative guiding principles to which changes in a society should adhere and which are considered to be intersubjectively shared [42]. Beyond such a general definition, however, the concept has been used differently across academic disciplines, and debates are often characterized by conceptual struggles and vagueness [15,43,44].…”

Governing criminal markets: The role of private insurers in kidnap for ransom

“…Fierce competition, constant innovation, and the entry and exit of agents is a hallmark of polycentric governance systems (Aligica & Tarko, 2013). Crime governance reduces losses, so insurance premia can be lowered.…”

“…Underwriting, risk evaluation, security advice, and crisis resolution services are therefore delivered by the best experts in their respective fields, responding appropriately to changing market conditions. Fierce competition, constant innovation, and the entry and exit of agents is a hallmark of polycentric governance systems (Aligica & Tarko, 2013). However, competition is constrained by collaboratively determined rules and processes that ensure the effective functioning of the overall system.…”

“…There are three basic features of polycentric governance: first, a multiplicity of decision-making centers, operating in distinct but overlapping areas; second, stable and ordered relationships and rules that may be institutionally or culturally enforced; and third, spontaneous order generated by evolutionary competition between agents using different ideas and methods (Aligica & Tarko, 2012Ostrom, 2010). Initially developed to study governance of common pool resources, current research applies the framework of polycentric governance to an ever-wider set of complex governance systems, for example, the scientific community, the free market, and common law (Aligica & Tarko, 2013). This article argues that polycentricity is also applicable to the governance of transnational criminal markets.…”

Institutional Resilience and Economic Systems: Lessons from Elinor Ostrom’s Work

“…The way to understand the general dynamic at work is to model the production of rules as an example of co-production, rather than team-production (Parks et al, 1981;Aligica and Tarko, 2013). In case of co-production, the members of the production team are also consumers of the good, and thus they have a vested interest in producing a quality good, while in case of teamproduction the production team produces solely for some outside consumers.…”