Adapting online contracts in the era of digital transformation from an institutional perspective

Homesteading and Property Rights; Or, "How the West Was Really Won"

Abstract. In this thesis, the effect of Turkey's institutional structure on economic performance is analyzed by using transaction cost and credible commitment which are contributed by New Institutional Economics. According to this school, neoclassical economics ignores transaction cost, bounded rationality, incomplete contracts and property rights. So these models will not represent the real world. But it's known that the transaction cost is always positive in the real world. According to this reality, to begin with the institutions containing the New Institutional Economics are investigated and the relationship between institutions and economic performance is explained. Afterwards defining, measuring and effects of transaction cost topics are mentioned. Soon after we handled the political transaction cost. In the next chapter, the policymaking process and credible commitment are explained. The role of institutions on formation of institutional policies and the 3 determiner legislative-executive-judiciary and the seperation of powers are discussed and credible commitment is clarified in this context. By giving the theoretical framework of this issues, Turkey's progress is reviewed. The important contribution of this thesis is by following New Institutional Economics perspective, first defining the political transaction cost and credible commitment and after showing the effects Turkey's institutional structure to economic performance by using time series analysis with structral breaks. Findings indicate that the transaction cost and credible commitment determined by institutional structure are highly important on investment decisions and national income. Anahtar Kelimeler: New Institutional Economics, Transaction Cost, Credible Commitment, Institutional Structure, Structral Breaks, Co-integration. Keywords. New Institutional Economics, Transaction Cost, Credible Commitment, Institutional Structure, Structral Breaks, Co-integration. JEL. B15, B25, B52, D23, L14. Highlights * Turkiye’de kurumsal yapinin ekonomik performans uzerine etkisi incelenmistir. * Kurumlar, islem maliyeti, politik surec ve guvenilir taahhude iliskin literatur taranmistir. * ICRG’den temin edilen verilerle es-anli ve yapisal kirilmali esbutunlesme analizi uygulanmistir. * Sonuc olarak Turkiye’de kurumsal yapi, ekonomik performans uzerinde onemli derecede etkilidir.

PRICE or rent control is but one of many forms of legislative action which interfere with private contracting in the market place. To delimit the scope of my analysis, I shall use the term "price control" to refer only to any set of regulations which satisfies the following three conditions. First, the control must fix the price (or income)' terms of private contracts; this categorically excludes any laws which regulate the distribution of income among the contracting parties on a share or percentage basis.2 Second, the control must involve no appropriation of proceeds to or from the government; taxation and subsidization are thus excluded. Finally, the fixing of price must not be associated with direct government sales, purchases, or manipulation of resources so as to maintain the regulated price;3 by this stipulation, price "support" is also excluded. Even on such terms, legal regulations to control price are still many and varied. To evaluate our understanding of the class of phenomena which we seek to explain it is essential that we discover implications refutable by facts. By this criterion the available body of economic theory pertaining to price control is deficient indeed: the massive literature on the subject offers few such implications.4 An alternative approach to analyzing the observable effects of price control is presented here.

The Evolution of Property Rights: A Study of the American West

Competition is the basic concept for both industrial organisation theory and institutional economics. Transition economies, including Russia, are natural laboratories allowing us to trace the emergence of competition, the influence of competition on the conduct of market participants, the relationship between competition and market structure and the institutional foundation of competition. This article provides a summary of the results of empirical studies in the above area. We try to explain some puzzles concerning the influence of competition on the conduct of Russian market participants and interpret the results in the framework of institutional and industrial economics. Overall, the results of empirical studies can be generalised as follows. Competition in Russian markets has been gaining momentum over the last 15 years. The results of empirical studies have confirmed the assumption that competition is an incentive for active restructuring of privatised enterprises. Many of the data collected are evidence in favour of the endogenous market structure approach. From the institutional viewpoint, the history of the evolution of Russia's transition economy shows interdependence between private property and competition: better protection of property rights is a precondition for the development of competition. At the same time, the model of corporate governance that allows the property rights of private owners to be protected in the Russian institutional environment restricts organisational diversity and therefore competition in Russian markets.

Based on the perspective of new institutional economics, this paper compares the competitiveness of the cultural industries in China and South Korea, and analyses the similarities and differences between the two countries in terms of the institutional environment, market structure and business cases. By sorting out the theoretical framework of new institutional economics, it explores the influence of factors such as property rights system, transaction costs and cultural industry efficiency on the development of cultural industry. China's cultural industry has advantages in terms of policy support and market scale, but the problems of insufficient intellectual property protection and imperfect market mechanism still restrict its international competitiveness. In contrast, South Korea's cultural industry is known for its mature market mechanism, strong content creation ability and effective intellectual property protection, which has successfully promoted the global spread of the "Korean Wave" culture. Through case studies of typical enterprises such as Tencent and YG Entertainment, the differences in competitiveness between the two countries' cultural enterprises in the international market are revealed. Finally, puts forward suggestions to optimise the institutional environment, strengthen international cooperation and promote cultural innovation, so as to promote the sustainable development of the cultural industries in China and South Korea. The research in this paper provides theoretical basis and empirical support for an in-depth understanding of the development mode and international competitiveness of Chinese and Korean cultural industries.

The Rule of Law and its Social Reception as Determinants of Economic Development. A Comparative Analysis of Poland and Germany

The starting point for this thesis is that the institutional and governances structures in which a large infrastructure project is realised, is of importance for the final result. Efficient arrangements could save substantially on total investments in infrastructures. To study in this thesis the institutional and governance structures of different infrastructure projects new institutional economics (NIE) is applied to three cases of canal building. The three canal projects are the canals of the Dutch Merchant King Willem I in the first half of the nineteenth century in the Netherlands, the Suez Canal in the second half of the nineteenth century and the Rhine-Main-Danube waterway that was completed in 1993 in Bavaria, Germany. The central research question is: Is it possible to determine from new institutional economics the characteristics of an efficient governance structure for investments in large infrastructures and for the exploitation of these large infrastructures? To answer this question transaction cost economics (TCE) of Oliver Williamson and property rights theory was used. The dissertation consists of three parts. First a description is given of the NIE, TCE and property rights theory. In the second part of the thesis an analytical scheme was constructed that was applied to the three canal projects. The third part is formed by the three case studies. Here the research focuses on the history of the three canals and the identification of the relevant governance structures. As a general conclusion for this thesis, the central research question can be answered positively. On the basis of the application of the analytical scheme, designed in this thesis, it turned out that it is possible to determine from TCE and property rights theory, the efficient governance structures, in a TCE sense, for investments in large infrastructures.

Institutional Economics: New

Environmental Markets: A Property Rights Approach, by Terry L.Anderson and Gary D.Libecap. Published by Cambridge University Press, Cambridge, UK, 2014, pp. 240, ISBN: 978 0 5212 7965 9, AUD$ 37.59 (paperback) AUD$ 94.03 (hardcover).

The conventional account lists four types of transaction costs: - Identifying potential buyers and sellers; - Negotiating deals; - Measuring performance, e.g., metering use; and - Enforcing agreements. Despite recent hype, cyberspace is not truly Newtonian because it does not eliminate all of these sources of friction. Enforcement costs in particular are still considerable with existing technology. With an eye toward these transaction costs, this Essay discusses one aspect of law in the on-line environment: the respective roles of contract and property rights. I discuss why property rights are necessary in cyberspace, notwithstanding predictions that low transaction costs will allow contract to usurp property rights in this setting. The possibility of a break in the chain of privity means that property rights -- which can be thought of as an "off the shelf" contract -- will still be necessary. In other words, contract formation may be costless, but monitoring post-contract execution behavior will often not be. Property rights will thus continue to be necessary to permit enforcement against parties not in contractual privity with information providers. The ease of contract formation informs the analysis of another important legal issue -- the "fair use" doctrine in copyright law. Conditions in cyberspace at least partially undermine the prevailing "market failure" theory that informs this doctrine. Instead of abandoning the doctrine, which I believe serves some important goals, I advocate a different theory. At least where markets are robust, I argue that we should return to the redistributive roots of the doctrine, in effect giving low transaction-cost subsidies for certain users of copyrighted works.

In the last two decades, a renewed interest in property rights have challenged the accepted interpretation of property rights as “bundle of rights” over the use of things and have rehabilitated the old classical interpretation of property rights as exclusive (absolute) dominium over things rooted in the right to exclude. This paper provides a three-dimensional framework for the study of property rights and shows that, historically, the reason for this dual nature of property rights derives from the fact that properties can either be treated as personal property, or capital. While the classical approach is consistent with the former interpretation, the neoclassical (“bundle of right”) approach is consistent with the latter. By reinterpreting the dual nature of property rights as a dichotomy between capital and personal property the paper links the dual nature of property rights to the dual nature of value: while the classical theory of property rights over personal properties derives from the classical theory of use-value, the neoclassical theory of property rights over capital derives from a theory of property rights linked to exchange-value. The work makes two main contributions to the debates in the legal and economic literature. First, it re-evaluates and justifies the interpretation of property rights as a “politically-embedded” bundle of right provided by legal realist, old progressive and institutional economists at the turn of the twentieth century. Second, it reassesses the conclusions reached by the Coasean legacy in law and economics; the paper shows that transaction costs are necessary and sufficient to explain the emergence and the form of legal institutions only in pure capitalistic societies, but cannot explain the emergence and the nature of legal institutions whenever personal properties are involved. Additional normative assumptions explaining the origin and the legitimacy of value judgments are needed to understand and explain the dual nature of property rights and to make sense of the decisions to employ personal properties as capital (or vice versa). This highlights the often neglected (but decisive) role played by the rationality assumption in legitimizing the normative conclusions reached by Coasean law and economics (and welfare economics more generally). It also highlights that the normative power of transaction costs is always institution-determined (socially-embedded), never institution-determining.

The development of the sharing economy results in the transformation of the social and economic institutions capable of both fostering and hindering the development of the economic system. Such institutions function as a means of reducing transaction costs. The economic effect of the digital revolution lies in slashing the transaction costs whereas all the previous industrial revolutions made for technology cost reduction and transaction cost escalation. At the same time, the total costs decreased and the transaction costs increased at an accelerating pace. The reduction in transaction costs is possible due to the transformation of business models and institutions. The sharing digital economy is a complex of technologies based on the artificial intelligence (AI) that allows transaction costs reduction accompanied by the emergence of a set of institutions. The article studies the functions of the institutional environment subject to the transformation in the sharing economy. The functions of the institutes this research accounts for are attributable to the fundamental regulatory relations between the economic agents which concern the changing character of the shared enjoyment of the property rights. Another promising area of the research is believed to be the analysis of the sharing economy’s effect on the transformation of the economic institution of property triggered by the new challenges originating from the inferiority of the traditional economic institutions.

Chapter 2 - Institutions and the Economics of Behavior I

Institutional economics is a school of economic thought that emerged under the leadership of Thorstein Veblen at the beginning of the 20th century, a time when America was in the process of fast-paced and massive industrialisation. Veblen (1909, pp. 622–623) criticised neoclassical theory's hedonistic and abstract conception of the human, stressing that people continue their social lives through institutions that he characterises as "established thought habits." Along with serious criticism of American social life, Veblen has many contributions to economics and social theory regarding the impact of the cultural and institutional environment on human life, habits, the role of the state in economic life, trade unions, pretentious consumption, the nature and functioning of industrial capitalism. Following the works of Veblen and John Commons, institutional economics became the dominant school of economics in America in the interwar period and lost its superior position after the Second World War. The emergence of a trend favouring the application of mathematical methods in economics, as well as the rise of Keynesian economics and the influence of immigrant economists in America after the war, displaced institutional economics from its dominant position and swept it to the periphery. In this way, the discipline of economics shifted towards mathematical formalism on the one hand and formed its orthodoxy as a technical social science on the other hand. "Neoclassical synthesis," which refers to the combination of Keynesian economics and neoclassicism, would be at the core of the discipline. However, the discipline of economics, which largely formulated its orthodoxy after the Second World War, confronted many theoretical problems. The basic assumptions of orthodox economics, such as general equilibrium, rationality and self-interest (Colander et al., 2004, p. 485), were considered unreal and also listed as the main problems of the discipline. By the 1970s, theoretical obstructions based on these problems, which were seen as being dependent on excessive abstraction and increasingly breaking away from real life, were partly surpassed through new institutional directions in classical, neoclassical and Austrian economics (Rutherford, 1994, p. 1) and with the emergence of a new institutional economics. The new institutional 11economics introduced orthodox economics – which operates based on the "holy trinity" of the new institutional economics rationality, self-interest and balance – to new variables such as limited rationality, economic agents affected by the cultural and institutional environment and incomplete information and process. The new institutional economics not only breathed life into orthodox economic theory with its emphasis on property rights, transaction costs, organisational theory and contracts, but also popularised the concept of the institution in almost all areas of the social sciences. As a result of this circumstance, two different traditions of thought were formed in institutional economics: The original institutional economics and the new institutional economics, while the institution and institutional analysis stood out as the scientific methodology of many researchers. However, there have been many responses to both the orthodox neoclassical theory of the discipline and its renewed orientations related to the new institutional economics. The responses in question can be placed within two categories: Inside and outside the Western thought. While it is possible to classify the heterodox schools of economics as a community of post-Keynesian/Sraffian, Marxist/radical, institutional/evolutionist, social, feminist and ecological economists whose criticisms come from the Western thought (Lee, 2012, p. 340), studies in Islamic economics are at the forefront of the criticisms from outside the Western thought.