Legal scholars, economists and other social scientist often refer to the idea that countries can be classified into a number of ‘legal families’ or ‘legal origins’. Yet, this research is unsatisfactory as regards the actual classifications of the legal systems of the world. It is the aim of this paper to fill this gap and to develop a more robust taxonomy of legal systems. This taxonomy is based on a new dataset of 156 countries that is subsequently analysed with tools of network analysis. Applying cluster optimisation, this paper finds that the world's legal systems can be divided into four clusters. It displays those clusters in a map, akin to the Inglehart–Welzel cultural map. It is suggested that those findings have important implications, not only for our understanding of the legal world, but also for the feasibility of legal transplants and harmonisation.

Electric power sectors around the world have changed dramatically in the last 25 years as a result of sector liberalization policies. Many electricity sectors are now pursuing deep decarbonization goals which will entail replacing dispatchable fossil generation primarily with intermittent renewable generation (wind and solar) over the next 20–30 years. This transition creates new challenges for both short-term wholesale market design and investment incentives consistent with achieving both decarbonization commitments and security of supply criteria. Thinking broadly about the options for institutional change from a Williamsonian perspective – thinking like Williamson – provides a useful framework for examining institutional adaptation. Hybrid markets that combine ‘competition for the market’ that relies on competitive procurement for long-term purchased power agreements with wind, solar, and storage developers, ideally in a technology neutral fashion, and ‘competition in the market’ that relies on short-term markets designed to produce efficient and reliable operations of intermittent generation and storage, is identified as a promising direction for institutional adaptation. Many auction, contract, and market integration issues remain to be resolved.

We examine an aspect of the argument of Teppo Felin and Nicolai Foss (‘The Endogenous Origins of Experience, Routines, and Organizational Capabilities: The Poverty of Stimulus’; 2011) where they reject the claim of Geoffrey Hodgson and Thorbjørn Knudsen (‘Darwinism, Causality and the Social Sciences’; 2004) that habits depend crucially on stimuli from the social environment. We argue that while rightly stressing human agency they also create a false dichotomy between agential and environmental factors in the explanation. Felin and Foss create further confusion by hinting – without adequate clarification – at an untenable notion of human agency as an uncaused cause. We raise several questions of clarification for these authors.

Nobel Laureate in Economic Sciences Elinor Ostrom's authoritative book Governing the Commons, published in 1990, and almost every other text she has published on the subject of the commons, strongly criticized Garrett Hardin's much-cited 1968 Science article “The Tragedy of the Commons.” Hardin's “tragedy” refers metaphorically to the eventual destruction of a commons as a result of collective overuse. Hardin claimed that statist solutions and privatization provisions are the only two policy means for addressing the tragedy. Ostrom explored user self-governance as a third alternative to avert the tragedy. Ostrom's exploration and her critical stance, however, have caused the misperception of her work as anti-Hardin, anti-tragedy, or more specifically, anti-statist and anti-privatization. This paper argues that despite Ostrom's clear criticism of Hardin's claim and her regard for user self-governance or community-based management, her work was not anti-statist or anti-privatization.

Copyright laws traditionally attempt to incentivize expression and minimize free rider problems through legal restrictions, at the expense of closing off access to cultural history. However, entrepreneurial changes to institutions and the creation of alternative governance structures can allow for spaces that facilitate expression without resorting to the copyright approach. Wikipedia, the free online encyclopedia, stands as a highly visible example of such institutional entrepreneurship, leveraging copyright law against its intended purpose. This paper uses the Bloomington School's IAD framework to explain the success of Wikipedia's alternative model of managing a common resource of free encyclopedia articles, and suggests a roadmap for understanding the role of institutional entrepreneurship in crafting alternative governance structures to foster expression.

Citizens' tax compliance should not only respond to the quality of formal institutions, but might also be culturally driven. We contribute to this literature by investigating whether tax morale, an individual's intrinsic non-pecuniary motivation to comply with taxes, is associated with the cultural values (following Hofstede's typology) held by this individual. The analysis exploits four waves of the European Values Survey (1981–2010) across 48 countries. The cultural dimensions are constructed through a polychoric principal component analysis on a set of relevant survey items consistent with Hofstede's definitions. Ordered logit estimations suggest that although values of individualism and femininity are associated with higher individual's tax morale, power distance and uncertainty avoidance are associated with lower tax morale. These results remain consistent as we increase the level of granularity of our investigation through within-region analyses and, subsequently, within-cohort analyses. We argue that these results inevitably enrich the emerging debate about cultural values and citizens' compliance with formal institutions. They also indicate that societal culture as well as individual values should be considered when designing policies aiming to improve tax compliance.

Entrepreneurial action takes place in a context of Knightian uncertainty. In order to overcome this uncertainty, entrepreneurs engage in a process of judgment resulting in a decision about the course of action. Institutions arise mainly to reduce economic friction by providing structure to human interaction and thus reducing uncertainty. However, institutions may also introduce further uncertainty and thus disrupt the judgment process preceding entrepreneurial action. The present paper builds upon recent efforts to integrate the concepts of uncertainty and institutions within the entrepreneurial context. Drawing on Frank H. Knight's seminal insight, the judgment-based view of entrepreneurship, and relevant concepts of entrepreneurial outcomes, the main contribution of the paper lies in the development of a model offering a coherent description of the way institutions affect uncertainty and the entrepreneurial process.

A main instrument for better understanding the formation of institutions, and explaining the differences in their long-run development between periods and societies, would be to use history as a laboratory, allowing us to test the hypotheses developed in the social sciences. This paper discusses the study by Douglas Allen, The Institutional Revolution, in that context, in order to identify some of the pitfalls in the current attempts by economists to use historical analysis. Next, the paper places his English case into a comparative perspective, helped by the recent insights gained by economic and social history, to see how these pitfalls can be avoided. Based on this, I argue for comparisons at the regional, national and global levels, and for a multidimensional view which includes social contextualization, combined with an open eye for discontinuity in long-run patterns, in order to avoid one-dimensional and teleological approaches to institutional change.

I use matched county pairs on either side of US state borders to investigate the causal effects of the Economic Freedom of North America index (EFNA) on local outcomes. This method is similar to Dube et al. (2010). I construct a panel of county pairs running from 1981–2012 and four measures of outcomes, logged real incomes, logged real per capita incomes, employment, and logged real wages, employing single year and five year differences-in-differences. I find small, but precisely estimated, effects on incomes but mixed effects on wages and employment. All regressions show low R 2. This supports the hypothesis that state-level economic freedom improves capital income or that it attracts capital income across state borders.

The exploitation of radio-electric spectrum bands for wireless transmission purposes has some features of the commons: it is subject to congestion and conflict without rules governing its use. The Coasean approach is to assign private property rights to overcome the tragedy of the spectrum commons. The process of assigning these rights is still centralized, with governments assigning property rights through agencies such as the Federal Communications Commission and National Telecommunications and Information Administration in the USA. We consider the possibility of self-governance of the spectrum. We use insights from the study of common pool resources governance to analyze the emergence of property rights to spectrum in a ‘government-less’ environment in which norms, rules, and enforcement mechanisms are solely the product of the repeated interactions among participants in the network. Our case study considers the spectrum-sharing arrangement in the 1,695–1,710 MHz band. Using agent-based modeling (ABM), we show that self-governance of the spectrum can work and under what conditions it is likely to improve the efficiency of the allocation of property rights.

The literature on the determinants of cross-country variation in financial system development identifies historical institutional factors, mostly rooted in colonial effects, as key causes. Using a sample of 39 African former European colonies for 2006–11, this paper investigates the extent to which the historical institutional determinants identified by legal origins, disease endowment, religion-based and ethnic fractionalisation theories explain current differences in financial system development across Africa. While most existing research focuses only on one financial system development dimension, namely financial system depth, this article considers also financial system access. The results do not support any of the above theories when depth measures are used, while three of them (legal origins, disease endowment and ethnic fractionalisation theories) are validated when using access measures. This suggests that in Africa financial system depth and access do not have common historical institutional determinants, pointing to the need for greater fine tuning of prevalent theories and empirical measures.

This paper develops an account of the normative basis of priority setting in health care as combining the values which a given society holds for the common good of its members, with the universal provided by a principle of common humanity. We discuss national differences in health basket in Europe and argue that health care decision-making in complex social and moral frameworks is best thought of as anchored in such a principle by drawing on the philosophy of need. We show that health care needs are ethically ‘thick’ needs whose psychological and social construction can best be understood in terms of David Wiggins's notion of vital need: a person's need is vital when failure to meet it leads to their harm and suffering. The moral dimension of priority setting which operates across different societies’ health care systems is located in the demands both of and on any society to avoid harm to its members.

Ex-ante impact assessment of agricultural, environmental, and rural policies has become an integral part of political decision-making processes in the European Union. While a variety of agri-environmental modelling tools exists, ex-ante policy assessment tools capturing the institutional dimension are rare and need to be improved. In this paper, we introduce a standardized procedure for ex-ante modelling institutional aspects for policy implementation: the ‘Procedure for Institutional Compatibility Assessment’ (PICA). PICA has been designed as an explorative and flexible, yet formalized methodology that enables policy-makers to identify, at an early stage, potential institutional incompatibilities. After relating PICA to relevant approaches for policy assessment, we elaborate on its four distinct steps, use a core element of the EU Nitrate Directive to illustrate its function, and then provide model validation by means of a test case.

In this article, we look into the question whether the Dutch waterboards can still be considered resilient institutions, effectively adapting to changing circumstances as often described in literature. We argue that current waterboards resemble the CPR management form of old only in name. Their institutional nature has changed considerably, thus providing a challenge to the future of CPR water management in the Netherlands. We examine not only the implications for the institutional performance and future of the waterboard system but also discuss possible ways to regenerate the system. With respect to the latter (changes in), the system of governance and community base character of waterboards are examined.

Roughly 50 years ago, the eminent German philosopher and social scientist Hans Albert presented a critique of ‘Model-Platonism’ in economics to describe essential elements of the ‘neoclassical style of economic reasoning’. Specifically, Albert advanced a series of epistemological arguments to illustrate conceptual shortcomings in neoclassical theory, which may be utilized to immunize the latter against conflicting empirical evidence. This article summarizes Albert's main arguments and illustrates his most important insights by using simple propositional logic. Based on these findings, a clarification and definition of ‘Model-Platonism’ is offered and the applicability of the Model-Platonism-critique to current developments in mainstream economics is assessed. Finally, two possible extensions of Albert's argument, the concepts of oscillating informational content and axiomatic variation, are illustrated with respect to their potential for immunization against critique.

In this paper, we revisit the relationship between economic freedom and growth across 407 German districts (Kreise). We build six indicators of economic freedom and cluster them into categories reflecting tax rates and size of the government and public sector. Exploiting the variation in the constructed indices of economic freedom, the evidence suggests less indebted districts with a lower share of taxes and a relatively smaller public sector achieve consistently higher growth rates and income levels. The beneficial effect of economic freedom on growth is robust to the variety of specification checks and does not appear to be driven by sample selection. The evidence does not indicate a lower level of economic freedom in former East German districts or greater economic freedom in West German districts but unveils a persistent north–south divide in the post-unification period. In the counterfactual scenario, a transition to the 90th percentile of economic freedom is associated with large income and growth gains. Such a transition would yield higher income levels and growth rates with a notable decrease in regional economic inequality within Germany.

We make a distinction between centralized, decentralized, and distributed payment mechanisms. A centralized payment mechanism processes a transaction using a trusted third party. A decentralized payment mechanism processes a transaction between the parties to the transaction. A distributed payment mechanism relies on the network of users to process a transaction on a shared ledger. We maintain that bitcoin is neither a centralized nor a decentralized payment mechanism. It is, instead, a distributed payment mechanism. We then consider decentralized and centralized aspects of the broader bitcoin payment space.

We forward the hypothesis and empirically establish that variations in the strength of family ties are rooted in culture. In particular, we show that individualism is associated with looser family ties. We exploit the associations between contemporary individualism and historical climatic and disease environments to establish a causal relationship. At both the individual- and country-levels, we find strong support that individualism reduces family ties. The estimated effects are economically large and robust to a wide variety of potentially confounding variables.

This paper addresses the issue of how rules are conceptualized by Hodgson in Old Institutional Economics (OIE). The argument is put forward that the concept of rules can be constructively clarified. Rather than provide a general form of single rules within a rule system, we argue for a taxonomic range of single rule forms. This approach has the additional advantage of providing a more explicit account of how rules operate as part of a rule system. It also provides one way to address the fluidity of rules. Rules are understood to be more or less fluid (incomplete) and subject to a practical dynamism. This, we argue, can be differentiated from the idea of tendency based on the capacity of agents not to follow rules. A useful concept here is that of ‘mezzo rules’ or recodifications that both define the rule and distance the agent from their own rule-following behaviour. In pursuing the argument we also highlight various methodological implications. First, conceptual development is a key aspect of the OIE, particularly when it is located within Dow's structured pluralism. As such elaboration on rule forms enhances the consistency of OIE as methodology. Second, the exploration of a taxonomic range of rules and of forms of fluidity can provide useful resources in mapping out institutional processes in real research.

This article is a reply to the comments made on my target article, ‘Institutions and Economic Development: Theory, Policy and History’, at the beginning of this issue.