Elements of the institutionalization process of the forest and pasture commons in Romania as particular forms of social economy

In Romania, the study of jointly owned property (dev?lm??ie) has been of great interest for social scientists during the different political regimes of the country. After the fall of the communist regime and after over 50 years of state ownership, the forests and pasture commons (ob?ti and composeorate) returned to be private property of newly established associative forms. This paper aims to identify and define the contemporary Romanian commons by reference to the general characteristics of social economy organizations. In order to achieve this and obtain a clearer view of the place of the commons in Romania's organizational environment, presentation of some elements of the commons’ institutionalization process after the fall of the communist regime is included. The data used for answering these two objectives comes from the analysis of a database comprising 328 questionnaires applied to board members of commons in Romania and various legal documents. The main argument of the paper is that the restitution process that led to the re‐establishment of the Romanian commons from public property to common private property—marked by hardships, conflicts, misunderstandings or faults—deepened the scarce knowledge of the political actors, general public and other stakeholders in regard to these organizations and perpetuated their unclear position in the organizational field.     

The reverse tragedy of the commons: an exploratory account of incentives for under-exploitation in an open innovation environment*

This paper presents an empirical account of a phenomenon that we refer to as the ‘reverse tragedy of the commons’ in open innovation. The name signifies the ‘under-exploitation’ of intellectual property (IP) under weak appropriability. The name is this graphic because the tragedy is costly, and can also render IP effectively worthless and block innovation in the short to medium term. We propose that the tragedy is borne out of the interaction between enterprise characteristics, a competitive setting and the framework that is set by the policy intervention. This finding is pertinent to policy-makers with regard to the design of research, development and innovation instruments, as well as managers who must determine how to implement open practices in innovation.     

Commons with increasing marginal costs: random priority versus average cost*

Indivisible units are produced with increasing marginal costs. Under average cost, each user pays average cost. Under random priority, users are randomly ordered (without bias) and successively offered to buy at the true marginal cost. Both average cost (AC) and random priority (RP) inefficiently overproduce. RP tends to overproduce less, but which game collects more surplus depends much on the demand configuration. We show that a key to compare the welfare properties of the two mechanisms is the crowding factor, i.e., the number of potential users over the number of units of output users can afford: The more crowded the commons, the more RP outperforms AC. In the quadratic cost case, beyond the threshold value of 2.4 for the crowding factor, RP strongly outperforms AC; beneath it AC only mildly outperforms RP. Thus the RP mechanism manages crowded commons better than AC.     

Networks of common property resources

A tragedy of commons appears when the users of a common resource have incentives to exploit it more than the socially efficient level. We analyze the situation when the tragedy of commons is embedded in a network of users and sources. Users play a game of extractions, where they decide how much resource to draw from each source they are connected to. We show that the network structure matters. The exploitation at each source depends on the centrality of the links connecting the source to the users. The equilibrium is unique and we provide a formula which expresses the quantities at an equilibrium as a function of a network centrality measure. Next we characterize the efficient levels of extractions by users and outflows from sources. We provide a graph decomposition which divides the network into regions according to the availability of sources. Then the efficiency problem can be solved region by region.     

Do patents work? Thickets,trolls and antibiotic resistance

This paper connects ideas from recent literature on the economics of intellectual property (IP) to address the question: Did the strengthening and broadening of IP rights from important patent policy changes in the US promote greater innovation? The analysis rests on the theory of cumulative innovation, which shows that if IP rights on a pioneer invention extend to follow‐on research and impediments to contracting exist, then strengthening patents can actually reduce overall innovation. Recent empirical studies are consistent with the theory: patents can significantly deter follow‐on research in “complex” technology areas where contracting is difficult (computers, electronics, telecommunications) but not in drugs, chemicals and human genes. I outline remedies from court decisions and antitrust policy for addressing inefficiencies from patent trolling, patent thickets and the anti‐commons of fragmented ownership. I then apply the analysis to the antibiotics market, drawing on recent research, to examine how patent and competition policies can be used to improve incentives for drug development in the battle against antibiotic resistance. The literature provides persuasive evidence that the policy changes overreached in broadening and strengthening IP rights and reveals important patent reforms for improving the effectiveness of patent systems in the US and Canada.     

PRODUCT LINE RIVALRY

We analyse how product line rivalry by multi‐product oligopolists is affected by market size and product substitutability. We show that the width and degree of overlap in competing product lines is determined by the tension between two effects: the drive to ‘be where the demand is’ and the desire to weaken competition and intra‐firm product cannibalization. Product lines are shown to be wider and more overlapped in large markets and when product substitutability is weak. Our analysis suggests that firms can increase their profits by agreeing not to overlap their product lines.     

Commons and cooperatives: A new governance of collective action

The Social and Solidarity Economy (SSE) is emerging as a social movement capable of moving society beyond the imbalances of the capitalist market economy and its top‐down regulation by the state. But the SSE's progress has been slow while unresolved challenges (e.g., climate, inequality) continue to intensify. Among communitarian responses to these challenges, the commons have shown great potential as a shared governance mechanism for the responsible management of common‐pool resources. To the extent that this success encourages broader applicability for commons, we focus also on commoning as crucial social practice rooted in collective action and adaptive governance. Adding this dimension of activism opens the possibility of enriching the SSE both in theory and practice for the purpose of strengthening its institutional make‐up, in particular cooperatives occupying a central position in SSE. Commoning enables us to conceive of tangible connections between commons and cooperatives as complementary modes of anti‐capitalist organization. We can illustrate this complementarity by analyzing how Ostrom's “design principles” for commons can help strengthen the ICA's Cooperative Principles. Useful lessons can be learned from concrete examples of commons–cooperative alliances, such as Ecuador's Buen Vivir initiative, the Enercoop PACA project in France, and Oakland's OmniCommons space.     

Inflation: The Invisible Foot of Macroeconomics*

We take a simple, well-known macroeconomic model and treat it as a game between two players—the government and an all-embracing union. The payoffs have the form of a prisoner's dilemma. The equilibrium outcome produces unwanted inflation and is not Pareto optimal. This is despite the fact that all participants are assumed to have full information. This result is shown to be quite robust to the form of the model and is not affected if one of the players is forced to announce its strategy in advance. This we call the invisible foot of macroeconomics.     

Endogenous Games and Mechanisms: Side Payments Among Players

We characterize the outcomes of games when players may make binding offers of strategy contingent side payments before the game is played. This does not always lead to efficient outcomes, despite complete information and costless contracting. The characterizations are illustrated in a series of examples, including voluntary contribution public good games, Cournot and Bertrand oligopoly, principal–agent problems, and commons games, among others.     

The Tragedy of the Commons: Institutions and Fisheries Management at the Local and EU Levels

Garrett Hardin's Tragedy of the Commons argument states that resources held in common will inevitably suffer overexploitation and degradation. However, recent contradicting evidence has led theorists to question the soundness of this claim. This paper assesses the accuracy and predictive success of the six essential assumptions of Hardin's approach. The aim of the paper is to compare the functioning of the tragedy of the commons approach at the local and the international levels, in order to demonstrate that the context we choose affects the applicability of the hypothesis in explaining policy outcomes. The paper compares the validity of the tragedy of the commons hypothesis in three marine cases: California fisheries, modern Oregon fisheries and European Union Common Fisheries Policy. We find that at the local level the tragedy of the commons can be mitigated when a co-management of institutions is achieved, while the EU case shows that the tragedy of the commons is a realistic prediction when dealing with international institutions.     

Social Conflict and Gradual Political Succession: An Illustrative Model*

This paper studies the evolution of political institutions in the face of conflict. We examine institutional reform in a class of pivotal mechanisms—institutions that behave as if the resulting policy were determined by a “pivotal” decision maker drawn from the potential population of citizens and who holds full policy‐making authority at the time. A rule‐of‐succession describes the process by which pivotal decision makers in period t + 1 are, themselves, chosen by pivotal decision makers in period t. Two sources of conflict—class conflict, arising from differences in wealth, and ideological conflict, arising from differences in preferences—are examined. In each case, we characterize the unique Markov‐perfect equilibrium of the associated dynamic political game, and show that public decision‐making authority evolves monotonically downward in wealth and upward in ideological predisposition toward the public good. We then examine rules‐of‐succession when ideology and wealth exhibit correlation.     

A strategic analysis of global warming: Theory and some numbers

We model the global warming process as a dynamic commons game in which the players are countries, their actions at each date produce emissions of greenhouse gases, and the state variable is the current stock of greenhouse gases. The theoretical analysis is complemented by a calibration exercise. The first set of results establishes theoretically, and then with illustrative numbers, the over-emissions due to a “tragedy of the commons.” The power of simple sanctions to lower emissions and increase welfare is then examined as is the effect of cost asymmetry. Finally, a complete theoretical charactrization is provided for the best equilibrium, and it is shown that it has a very simple structure; it involves a constant emission rate through time.     

The Tragedy of the Commons Revisited

The Malthus–Hardin tragedy of the commons is formulated as a dynamic game between "clans". At each date a member of a clan desires more newborns of her/his type and more current consumption, harvested from the commons. Equilibrium in the dynamic game yields a steady state level of per capita consumption and a steady population level for each clan (births equal deaths). Four outcomes are obtained, depending on the assumptions about the discount rates of members of a clan and about the mode of competition for "large populations" for each clan. Lack of property rights for agricultural land in the commons leads to equilibrium with excessive populations and low per capita consumption.     

OPTIMAL DISTRIBUTION OF POWERS IN A FEDERATION: A SIMPLE, UNIFIED FRAMEWORK

In a federation with n≥ 2 regions the relative optimality of five regimes – autarky, centralization, unregulated devolution, regulated devolution and direct democracy – is examined. Public policy consists of redistribution and regional public good provision. Regional incomes are uncertain and correlated. Estimates of the usefulness of regional public goods are uncertain and the federal government's estimates are noisier relative to those of regional governments. The optimality of each regime is influenced by four margins – regional insurance, coarseness of federal information, internalization of spillovers and raiding the commons. Regulated devolution is the only regime that is capable of producing the constrained first best level of public goods. Federal insurance under direct democracy can be inadequate relative to that under a utilitarian federal government. An increase in the number of regions allows better risk pooling but also greater opportunities for raiding the commons.     

Least-Cost Avoidance: The Tragedy of Common Safety

This article shows that the least-cost avoider approach in tortis not necessarily the optimal way to attain least-cost avoidancewhen accidents can be avoided by either of two parties. Whenparties do not observe each other's costs of care at the timeof the accident and are unable to determine which party is theleast-cost avoider, they fail to anticipate the outcome of theadjudication. Under these circumstances, accident avoidancebecomes a commons problem because care by each individual partyreduces the prospect of liability for both parties. As a result,parties suboptimally invest in care. We show that regulationremoves this problem and is superior to tort liability bothwhen parties act simultaneously and when they act sequentially.We further examine how different liability rules perform inthis respect. (JEL K13, K32)     

新产品开发过程中的战略均衡研究

基于企业促销和广告宣传能提高消费者心目中的新产品质量水平,而将市场阶段细分为上市初期阶段和中后期阶段。考虑到上市初期阶段新产品质量的提高会影响产品需求率,进而影响企业收益和成本,建立基本产品、新产品和竞争产品并存下的企业利润模型,研究了新产品开发时间与质量之间的平衡问题,并分析了上市初期阶段产品质量的提高对企业利润和营销战略的影响。     

The Political Economy of the Global Environment

Issues of the ‘global commons’ have secured a prominent place in environmental discourse. The temperature-regulating functions of the global atmosphere and radiation control functions of stratospheric ozone offer clear examples of true public goods. Other environmental assets, such as biodiversity and forests, are treated as if they are public goods, but in reality are complex mixtures of private goods, local public goods and global public goods. The approach to the provision and protection of these goods has tended to focus on the development of international agreements, such as those at the Rio de Janeiro ‘Earth Summit’ in 1992. But do these agreements contain the relevant incentives to conserve the global commons? Much depends on one's view of human nature. The Scottish economic tradition suggests that unless incentives focus on ‘self love’, as postulated by Hume and Smith, improvements will, at best, be marginal. A richer array of policy measures is obtained by analysing the potential for ‘global bargains’, trades that improve the environment whilst making each party better off. The souls of Hume and Smith surely approve recent developments in practical global bargains.     

Complementarities between organisational strategies and innovation

The purpose of this paper is to determine whether organizational strategies in various manufacturing industries are complementary with innovation. In particular, our interest is to discover which organizational strategies are complementary with major innovations (world-first and Canada-first). Knowledge of complementarity should pave the way for creating sustainable competitive advantage because the use of a complex strategy may be difficult to imitate. In other words, competitive advantage increases as the complexity of the strategy increases (i.e. because the number of strategy combinations follows a power law), which acts as a barrier to potential imitators (Rivkin, J.W. (2000) Imitation of Complex Strategies. Management Science, 46(6), 824–844.).

Because of the static nature of our results (productivity and profit are for 1997), their interpretation can only be tentative. Thus, our research is really a first step along the road to understanding the (potential) importance of complementarities among firm strategies. Caveats aside, managers may want to compare their own firm’s emphasis on particular strategies against what is empirically determined to be complementary with innovation and high-performance within their industry. The frequency of complementary pairs that involve innovation range from 40 to 50% depending on whether we are talking about profit, productivity, or strategies. This result is important—as it means that innovation outcomes are statistically significant for both increased productivity and increased profit. Furthermore, innovation was found to be complementary with many organizational strategies. The complementary strategies across industries were quite different, but this was expected to occur.     

Optimal freeware quality in the presence of network externalities: an evolutionary game theoretical approach

New software products often face difficulty in achieving market penetration. A potential remedy is to offer a freeware version of the software to encourage initial adoption and establish a larger user base for the software, thereby increasing the commercial version's value to adopters in future periods. However, to avoid complete cannibalization of the commercial version, the freeware version's quality must be sufficiently low and the price of the commercial version must not be too high. We model the effect of these two decision variables, price and freeware quality, on the adoption of software using static and evolutionary game theory.     

The Commons with Capital Markets

We explore a dynamic commons problem and assess the welfare consequences of access to capital markets. The commons has a high intrinsic rate of return but its fruits cannot be secured by individual agents. Capital market access allows resources to be held securely and intertemporally transferred, but at a lower rate of return. In a two period model, we completely characterise symmetric consumption and extraction behaviour in four environments: under a strategic and a competitive equilibrium concept, and with and without market access. Strategic equilibria dominate competitive ones: while agents disagree over how to divide the resource, all would prefer it to be larger; the strategic concept allows them to anticipate returns to their conservation. As the number of agents becomes infinite, the strategic outcome converges to the competitive; as the number of agents falls to one, it converges to the planner’s. Market access has a positive effect on welfare owing to its consumption and extraction smoothing properties and a negative effect owing to its creation of an outside option to the commons, encouraging its depletion. A sufficient condition for autarky to dominate market access for some levels of communal endowment is that the world market discount factor exceed the subjective discount factor. Multiple equilibria may arise: these result from market access, not the equilibrium concept. The authors thank Ralph Bailey, Siddhartha Bandyopadhyay, Matthew Cole, Carl Devore, Felix Kubler, Chirantan Ganguly, Martin Jensen, Indrajit Ray, Celine Rochon, Dave Rusin, participants at the Royal Economic Society 2005 and an anonymous referee for valuable comments. They are grateful for funding under the ESRC’s World Economy and Finance programme (RES-156-25-0022).