The Appeal of Decentralization
The Appeal of Decentralization
This chapter offers a comparative analysis of political-economic institutions in what may seem like a counterintuitive manner. The default presumption in this domain is that the task of establishing institutional arrangements should accord priority to markets and other decentralized mechanisms. The chapter then analyzes the case for markets and assesses several other decentralized mechanisms for social cooperation. It argues that because the commonly acknowledged initial conditions that markets presuppose if they are to operate efficiently are quite restrictive and because markets themselves offer no mechanism for monitoring and maintaining those conditions, there is no clear reason to bestow first- or second-order priority on markets as a default mechanism of social coordination.
Keywords: political-economic institutions, institutional arrangements, markets, decentralized mechanisms, social cooperation
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