Ostrom: Beyond Markets and States
Beyond Markets and States: Polycentric Governance of Complex Economic Systems

Online here: http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2009/ostrom_lecture.pdf  

Contemporary research on the outcomes of diverse institutional arrangements for governing common-pool resources (CPRs) and public goods at multiple scales builds on classical economic theory while developing new theory to explain phenomena that do not fit in a dichotomous world of “the market” and “the state.” Scholars are slowly shifting from positing simple systems to using more complex frameworks, theories, and models to understand the diversity of puzzles and problems facing humans interacting in contemporary societies. The humans we study have complex motivational structures and establish diverse private-for-profit, governmental, and community institutional arrangements that operate at multiple scales to generate productive and innovative as well as destructive and perverse outcomes (North 1990, 2005).

In this article, I will describe the intellectual journey that I have taken the last half century from when I began graduate studies in the late 1950s. The early efforts to understand the polycentric water industry in California were formative for me. In addition to working with Vincent Ostrom and Charles
Tiebout as they formulated the concept of polycentric systems for governing metropolitan areas, I studied the efforts of a large group of private and public water producers facing the problem of an overdrafted groundwater basin on the coast and watching saltwater intrusion threaten the possibility
of long-term use. Then, in the 1970s, I participated with colleagues in the study of polycentric police industries serving U.S. metropolitan areas to find that the dominant theory underlying massive reform proposals was incorrect. Metropolitan areas served by a combination of large and small producers could achieve economies of scale in the production of some police services and avoid diseconomies of scale in the production of others.

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