When you design a framework of rules, you make some basic choices. You decide which model of governance (decision making) you prefer and who is to own the fish that are caught. You can create different combinations with these basic forms and arrive at very different solutions.
Property \ Governance | Hierarchy (state authority) | Co-operative network |
Private property | ||
Public property |
The sections below give some more information on the different options.
1. Choosing a model of governance
Key agent | State | Local networks |
Key concepts | Power and authority | Personal relationships, communication and shared interests |
Design principle of framework | Hierarchy (top down) | Partnership (equal eye-level) |
Strengths | Peace and Security Laws clearly permit or forbid how people behave Laws can be enforced if they are broken |
High expertise and flexibility in solving problems and serving people’s interests Freedom to improvise and react quickly |
Weaknesses and risks | Danger of abuse of power Inflexibility Weak incentives for personal initiative |
“Veto-players” can block decisions Rules are difficult to enforce if they are broken |
Remedies | Democracy and human rights Rule of law Checks and balances in the constitution |
Moral sanctions Culture of responsibility |
2. The issue of property: who owns the fish harvest?
Two basic options, and some criteria to think about:
Private property | Public property | |
Property rules | Each fisherman owns what he catches He can make use of his catch as he pleases |
Each fisherman delivers his catch to a public representative The fish are then distributed to the community members |
Incentive for fishermen | ||
Effect on total output of fish | ||
Effect on fish stocks |
3. Further questions to consider when designing institutions
- Do you want to define a goal that must be achieved?
- Who has the power to make decisions?
- Do you want to provide tools to enforce rules?
- Is there a danger of the abuse of power?
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