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Assessing the potential of new institutional economics to explain institutional change: the case of road management liberalization in the Nordic countries

Published online by Cambridge University Press:  01 April 2008

JOHN GROENEWEGEN  and
MARTIN DE JONG
JOHN GROENEWEGEN*
Affiliation:
Delft University of Technology, The Netherlands
MARTIN DE JONG*
Affiliation:
Delft University of Technology, The Netherlands
*
Correspondence to: Delft University of Technology, Postbus 5, 2600 AA Delft, The Netherlands. Email: j.p.m.groenewegen@tudelft.ni
Correspondence to: Delft University of Technology, Postbus 5, 2600 AA Delft, The Netherlands. Email: j.p.m.groenewegen@tudelft.ni
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Abstract

Like other network industries, construction and maintenance of transport infrastructure have also seen a recent trend towards liberalization, deregulation, re-regulation, and sometimes privatization. With respect to institutional arrangements, this change implies that previously vertically integrated state-owned enterprises have been replaced by ‘more market’, meaning private ownership and contracts together with regulation by an independent government agency. When economists discuss institutions, this is preferably done in terms of efficiency and equilibrium. We discuss Williamson's Transaction Cost Economics (TCE) and Aoki's Comparative Institutional Analysis (CIA) as being two representative approaches of New Institutional Economics in which efficiency and equilibrium are central. What is the applicability of these two approaches to explain institutional change? The case of road management in Nordic countries provides the empirical evidence. We will draw conclusions as to the strengths and weaknesses of the two approaches and add suggestions to complement the efficiency approach, which allow for a more detailed level of analysis, in which also issues of political power are included.

Type
Research Article
Information
Journal of Institutional Economics , Volume 4 , Issue 1 , April 2008 , pp. 51 - 71
Copyright
Copyright © The JOIE Foundation 2008

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