Homogeneity and Heterogeneity Within and Across Boundaries and Shorelines: Ensemble of Darwin's Finches and Human Transaction Types

Synopsis: In the most famous example of the biological process of adaptive radiation, two forces explain the fourteen distinct species of Darwin's finches on the Galápagos and Cocos Islands: First, populations adapt to their respective distinct ecological environments. Second, previously separated populations come in contact and may adapt to mitigate inter-species competition. The result is a complex pattern of homogeneity and heterogeneity among the birds, both on a single island and across islands. This pattern reflects the finches' adaptations both to the distinct ecological conditions created by the visible shorelines that separate the islands' niches and to the finches' own less-visible cultural and societal shorelines. The New Institutional Economics highlights the fact that human institutional infrastructures also exhibit complex homogeneities and heterogeneities, as we adapt those infrastructures to accomplish the tasks at hand in distinct geographic and societal contexts. Mixes of both state enforcement and self-enforcement, through inter-temporal, inter-issue, and inter-actor linkages, provide support and enforcement for transactions; and those mixes differ across transactions and across states. When transactions occur across state or cultural shorelines, institutional infrastructures must be flexible enough to accommodate those differences, without allowing the differences to become disguised protectionism or barriers to competition. These issues contribute to many of the regulatory disputes associated with ‘globalization’. We briefly consider two concrete recent examples: (1) the European Union–United States ‘Safe Harbor’ Agreement that regulates firms' policies toward Internet-data privacy; and (2) international trade policy negotiations over regulation of ‘geographical indications’ (for example, Champagne or Roquefort) as means of assuring product quality for processed foods. This revised version was published online in July 2006 with corrections to the Cover Date.