Property Rights, Consumption and the Market Process (New Horizons in Institutional & Evolutionary Economics Series)

189 Pages·2008·2.98 MB·English

by  David Emanuel Andersson

Property Rights, Consumption and the
Market Process
NEWHORIZONSININSTITUTIONALANDEVOLUTIONARYECONOMICS
Series Editor:Geoffrey M.Hodgson
Research Professor,University of Hertfordshire Business School,UK
Economics today is at a crossroads.New ideas and approaches are challenging the
largely static and equilibrium-oriented models that used to dominate mainstream
economics.The study of economic institutions – long neglected in the economics
textbooks – has returned to the forefront oftheoretical and empirical investigation.
This challenging and interdisciplinary series publishes leading works at the fore-
front of institutional and evolutionary theory and focuses on cutting-edge analyses
ofmodern socio-economic systems.The aim is to understand both the institutional
structures ofmodern economies and the processes ofeconomic evolution and devel-
opment.Contributions will be from all forms ofevolutionary and institutional eco-
nomics,as well as from Post-Keynesian,Austrian and other schools.The overriding
aim is to understand the processes of institutional transformation and economic
change.
Titles in the series include:
Institutional Economics and the Formation of Preferences
The Advent of Pop Music
Wilfred Dolfsma
Globalization,Economic Development and Inequality
An Alternative Perspective
Edited by Erik S.Reinert
Institutions,Money and Entrepreneurship
Hayek’s Theory of Cultural Evolution
Edited by Jürgen G.Backhaus
Productivity,Competitiveness and Incomes in Asia
An Evolutionary Theory of International Trade
Hans-Peter Brunner and Peter M.Allen
The Hardship of Nations
Exploring the Paths of Modern Capitalism
Edited by Benjamin Coriat,Pascal Petit and Geneviève Schméder
An Economic Analysis of Innovation
Extending the Concept of National Innovation Systems
Markus Balzat
Evolutionary Economics and Environmental Policy
Survival of the Greenest
Jeroen C.J.M.van den Bergh,Albert Faber,Annemarth M.Idenburg and Frans H.
Oosterhuis
Property Rights,Consumption and the Market Process
David Emanuel Andersson
Property Rights,
Consumption and the
Market Process
David Emanuel Andersson
National Cheng-Kung University,Tainan,Taiwan and National
Sun Yat-sen University,Kaohsiung,Taiwan
NEW HORIZONS IN INSTITUTIONAL AND EVOLUTIONARY
ECONOMICS
Edward Elgar
Cheltenham,UK • Northampton,MA,USA
© David Emanuel Andersson 2008
All rights reserved.No part of this publication may be reproduced,stored in a
retrieval system or transmitted in any form or by any means,electronic,
mechanical or photocopying,recording,or otherwise without the prior
permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing,Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA
A catalogue record for this book
is available from the British Library
Library of Congress Control Number:2008932884
Daly,Herman E.
[Selections,2007]
Ecological economics and sustainable development,selected essays of
Herman Daly/Herman E.Daly.
p. cm.— (Advances in ecological economics)
Includes bibliographical references and index.
1.Environmental economics. 2.Sustainable development. I.Title.
HC79.E5D3242 2007
338.9’27—dc22
2007001391
ISBN 978 1 84720 955 9
Printed and bound in Great Britain by MPG Books Ltd,Bodmin,Cornwall
Contents
List of tables vi
Preface ix
Acknowledgements xi
1 Attributes,entrepreneurship and institutions 1
2 Attributes and the theory of economic property rights 25
3 Property rights,institutions and co-ordination costs 57
4 Production attributes and the capital structure 82
5 Entrepreneurship,attributes and judgement 99
6 Individual choice and consumption attributes 116
7 Institutions and the demand for consumption attributes 137
References 160
Index 171
v
Tables
1.1 Classification of institutions 6
1.2 An overview of some research programmes in economics 21
1.3 The neoclassical,Austrian and Post-Keynesian research
programmes and the research programmes implied by the
theory and applications in this book 22
2.1 Cultural infrastructure as measured by the number of
cultural Michelin stars (CAI),main metropolitan areas of
Europe,2003 44
2.2 Descriptive statistics of the hotel market,1278 hotels in 68
European cities,2003 46
2.3 Hedonic price function for the European market for single
rooms,2003 47
2.4 Hedonic price function for the European market for double
rooms,2003 48
2.5 Description of the sample;condominium rental market,
Singapore,1987–90 51
2.6 Correlation matrix for socio-economic neighbourhood
variables (logs) 52
2.7 Hedonic price function for condominium rentals in
Singapore,1987 53
2.8 Conclusions regarding condominium attributes,Singapore,
1987 54
3.1 Economic Freedom Index;Brazil,Chile and Hong Kong,
1995 65
3.2 Examples of institutions and co-ordination costs
affecting small firms: São Paolo and Santiago,1990s 70
3.3 Performance of national financial markets as measured
by the Sharpe ratio (M),1977–96;Economic Freedom
Index,1980–95 73
3.4 Rank-ordered reasons given for the attractiveness of
London as a financial centre 74
4.1 Mean number of years of formal education in selected
OECD countries 92
vi
List oftables vii
6.1 Recreation consumption as percentage of total
consumption,1975 and 2002 121
6.2 Descriptive statistics,the ‘hoteltravel.com’Singapore
market,2006–7 132
6.3 Hedonic price function for rooms offered by
‘hoteltravel.com’in Singapore 134
7.1 Interdependencies in consumption 141
7.2 The ideological ‘catechisms’of modernism and
postmodernism 146

Preface
This book reflects the development of my thinking about economic and
other social phenomena over the past 15 years. As a PhD student in the
1990s, my first encounter with economic theory was with spatial equilib-
rium models ofreal estate markets.I was struck by the simplicity and inter-
nal consistency ofthose models,and initially accepted them as an adequate
representation of reality. But then I read Jane Jacobs’s book, The Death
and Life of Great American Cities (1961), which presented a completely
different image of the urban economy.Observing the city in which I lived
at the time,it seemed that Jacobs was right and that neoclassical theory was
wrong,at least if my perception reflected any kind of objective conditions.
I preferred to conclude that I was not delusional. Land uses in real cities
are not neatly separated into functionally specialized parts, as one would
expect if firms minimized supposedly well-known transport costs per unit
ofland area.Notwithstanding their empirical richness and implicit critique
of equilibrium theorizing, I was still not quite sure what theory would
better account for Jacobs’s observations.It seemed to me as if Jacobs pro-
posed a set of plausible hypotheses in search of an underlying theory.
Around 1995,I read Hayek’s The Use ofKnowledge in Society(1945) for
the first time.This was the key that unlocked the question of why Jacobs
seemed right and equilibrium models seemed wrong.It was a question of
dispersed local knowledge that could not be communicated to any one
person at the centre. Knowledge is necessarily imperfect, and therefore
people learn from one another;such interpersonal learning processes often
require face-to-face encounters.Location matters apart from any transport
costs,and the transport costs themselves are only imperfectly known.
My reading of Hayek made me curious about his background,and led
me to discover the Austrian school of economics,whence I discovered the
focus on entrepreneurial market processes in the writings of Kirzner,
Lachmann and others.Another aspect was the importance ofreliable insti-
tutions for the exchange of property rights and the superiority of decen-
tralized markets over central planning for the discovery and dissemination
of dispersed knowledge.
There was,however,one thing that I looked for in vain among the Austrian
economists. There was much discussion of planning and markets, but not
much discussion of varieties of planning and varieties of markets. I also
ix