New Institutional Economics

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NEW INSTITUTIONAL ECONOMICS: GOVERNANCE OF TRANSACTIONS, INCOMPLETE CONTRACTS, AND BARGAINING

February 5-February 9, 2007

PhD-course, Mansholt Graduate School

WAGENINGEN UNIVERSITY

By Professor Kostas Karantininis (KVL, Denmark)

and Dr. Laura Loucks (WU, Netherlands)

CONTENTS

The focus of the course is on the theory of new institutional economics and on empirical applications relevant for the food chain and/or rural activities. The course will open the door to established and new literature: it will provide the keys to unlock (read it). Empirical applications will play an important role and ideas for empirical research will be discussed.

PREREQUISITES

Students are expected to be familiar with the course ‘Institutional Economics and Economic Organisation Theory’ (AEP, 20806) or with the content of the book Douma, S and H. Schreuder (2002) Economic Approaches to Organisations. Third Edition. Prentice Hall, Harlow, 282 pp.

OVERVIEW

The purpose of this course is to examine developments of New Institutional Economics (NIE), both in theory and applications. The course offers an overview of NIE, and highlights some of the most important (out of a vast literature) branches of the literature, namely: Transaction cost economics, bargaining, agency theory, property rights, incomplete contracting, and networks.

To put this literature in perspective, we follow O. Williamson’s (2000a) classification of the four levels of social analysis, namely: Embeddedness; Institutional Environment; Governance; Resource Allocation. The first level, touches upon issues mainly related to economic sociology, and it is viewed in this course as a springboard to study network theory – an issue very relevant to the organisation of agriculture and agribusiness. Level two of analysis refers mainly to property. Here we deal with property rights theory, both as an “institutional environment” as well as an alternative theory of the firm. The extensions discussed here deal with the application of property rights theory to the problems of food quality and food safety, and intellectual property rights in relation to GMOs. Level three of Williamson’s classifications relates to governance. Transaction cost economics, and ex-post contract analysis. Here we examine transaction cost theory, with applications to “theory of the farm” and organisation of the agri-food industry. Naturally, we do not deal with the fourth level of analysis, which is the subject of neoclassical economic theory.

The course will be structured accordingly. It is divided into five Lectures. The first lecture provides with an overview of NIE theory. The second lecture is on Transaction cost theory and applications to the “theory of the farm” and the organisation of agri-food industry. Here we introduce bargain theory. The third lecture is an introduction to agency theory and complete contracting. The fourth lecture will deal with Property Rights theory and incomplete contracting. This constitutes one of the most recent and dynamic branches of the theory of the firm. In the fifth lecture we attempt to unify the theory and see some applications to agrifood.

CREDITS AND FINISHING THE COURSE

This will be a 4 ECTS course, which will be finished by a short paper for PhD students (in relation to their research work)

Conditions for credits will be:

TEACHING METHODS

The syllabus of the course and other teaching material will be available 2 weeks in advance. Students are assumed to have read the material.

This program will consist of lectures – including discussion - in the morning (from 9.00 – 12.00), with a coffee/tea break at circa 10 am. In the afternoon (13.30 – 16.00) a number of case studies and empirical examples will be practiced. Moreover research approaches of PhD students can be discussed.

THE PAPER

Some topics will be provided by the teachers as a suggestion. These will be provided in advance together with the literature. Students are encouraged to propose topics of their own interest. The first afternoon is dedicated in discussing and selecting topics. During the week, students are expected to prepare a detailed proposal of their paper. Complete, with problem statement, hypothesis, literature. The last afternoon is dedicated in the presentation of the proposals by the students. Papers should be submitted within a period of 3 months after finishing the course and will be commented and marked by the lecturers.

LECTURERS:

Prof.dr. Kostas Karantininis and Dr. Laura Loucks. Kostas Karantininis is research professor at the University of Copenhagen. Dr. Laura Loucks is Postdoc researcher at Wageningen University. For more information see the internet sites: http://www.flec.kvl.dk/kok/ and http://www.aep.wur.nl/UK/Staff/Loucks/

The previous course of Kostas Karantininis in 2004 had an overall judgement of 4.7 out of 5.

PARTICIPATION:

The maximum number of participants is set at 20. PhD-students of Mansholt Graduate School have preference if they register before December 1, 2006.

COURSE FEES:

For PhD-students of the Mansholt Graduate School the course fee is 275 Euro. For other students and staff members, there is a fee of 500 EURO for the whole course, including lunches, coffee/tea, informal reception and feedback on the paper.

LOCATION:

Leeuwenborch, Hollandseweg 1, 6706 KN Wageningen

REGISTRATION PROCEDURE:

Register via the website

http://www.sls.wau.nl/mi/mgs/procedures_and_forms/Course_registration_form.htm

Please make sure you provide the most recent contact details so that in case of any changes you will be notified promptly.

After your internet registration you will receive a short notification that your name has been registered.

At least 4 weeks before the course you will receive a confirmation about the location and the schedule. MGS will also send a bill to your address indicated in the registration form.

Please e-mail to Marcella.haan@wur.nl in case you have not received the second confirmation two weeks before the course.

Cancellations:

The participants can cancel their registration without any fee 5 weeks before the course starts. Cancellation fee of 100% applies if participant cancels the course less than 5 weeks prior to a course. Substitution is always preferred.

The organisers have a right to cancel the course not later than 5 weeks before the course starts in case the number of registrations did not reach the minimum.

The participants will be notified of any changes at their e-mail addresses.

Further Information

For further information about the content of the course please contact the organiser:

Prof.dr.ir. A.J. Oskam, Agricultural Economics and Rural Policy Group arie.oskam@wur.nl

For other details about logistics, registration, fees, study materials, etc. please contact

Marcella Haan

Tel +31 317 484126

Marcella.haan@wur.nl

Additional information on accommodation at the Wageningen International Centre can be found at

http://www.wicc-wir.nl

Further information on Mansholt Graduate School and its educational activities: http://www.sls.wau.nl/mi/mgs/courses/index.htm

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