aoa to all.somebody elaborate the theories by Oliver williamson & Elinor Ostrom for w/h they are awarded nobel prize,the theory of information impactedness n economic governance especially the commons.Thnx Regards

Elinor Ostrom has demonstrated how common property can be successfully managed by user associations. Oliver Williamson has developed a theory where business firms serve as structures for conflict resolution. Over the last three decades these seminal contributions have advanced economic governance research from the fringe to the forefront of scientific attention.

Economic transactions take place not only in markets, but also within firms, associations, households, and agencies. Whereas economic theory has comprehensively illuminated the virtues and limitations of markets, it has traditionally paid less attention to other institutional arrangements. The research of Elinor Ostrom and Oliver Williamson demonstrates that economic analysis can shed light on most forms of social organization.

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.

Oliver Williamson has argued that markets and hierarchical organizations, such as firms, represent alternative governance structures which differ in their approaches to resolving conflicts of interest. The drawback of markets is that they often entail haggling and disagreement. The drawback of firms is that authority, which mitigates contention, can be abused. Competitive markets work relatively well because buyers and sellers can turn to other trading partners in case of dissent. But when market competition is limited, firms are better suited for conflict resolution than markets. A key prediction of Williamson's theory, which has also been supported empirically, is therefore that the propensity of economic agents to conduct their transactions inside the boundaries of a firm increases along with the relationship-specific features of their assets.


Reference: Nobleprize.org




If you are interested in studying the details then click here.

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Regards,
P.R.

Ostorm has worked on the theory of commons. Here I am reproducing her work taken from wikipedia. I think it is self explanatory, but however before reading the below text. One should know what is "Tragedy of Commons". A simple example is that of grazing lands. Since there exists large grazing lands which are not property of any individual, so there is no property right. All people can use it, therefore it is called "Common". But tragedy with common is that it can be used ruthlessly. People will use its resources more and more because they would think that if I couldnt get more benefit from it, other people will take that benefit. So that ruthless use will make the grazing lands as barren lands. Ellinor studied this phenomena and made her observations, which I am reproducing below from Wikipedia:

"Ostrom is considered one of the leading scholars in the study of common pool resources. In particular, Ostrom's work emphasizes how humans interact with ecosystems to maintain long-term sustainable resource yields. Common pool resources include many forests, fisheries, oil fields, grazing lands, and irrigation systems. She conducted her field studies on the management of pasture by locals in Africa and irrigation systems management in villages of western Nepal. Ostrom's work has considered how societies have developed diverse institutional arrangements for managing natural resources and avoiding ecosystem collapse in many cases, even though some arrangements have failed to prevent resource exhaustion. Her current work emphasizes the multifaceted nature of human–ecosystem interaction and argues against any singular "panacea" for individual social-ecological system problems.

Ostrom identifies eight "design principles" of stable local common pool resource management:

1.Clearly defined boundaries (effective exclusion of external unentitled parties);
2.Rules regarding the appropriation and provision of common resources are adapted to local conditions;
3.Collective-choice arrangements allow most resource appropriators to participate in the decision-making process;
4.Effective monitoring by monitors who are part of or accountable to the appropriators;
5.There is a scale of graduated sanctions for resource appropriators who violate community rules;
6.Mechanisms of conflict resolution are cheap and of easy access;
7.The self-determination of the community is recognized by higher-level authorities;
8.In the case of larger common-pool resources: organization in the form of multiple layers of nested enterprises, with small local CPRs at the base level.

Regards

@princess royal
@newstudent
thank u sooooooooo much.
but i still ve some problem in completely grasping the exact idea f the theory coz no economic background .i ll be obliged if respected members can further simplify the idea f these theories.examplifying n thier narrating advantages for pakistan would help.Regards

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Stop counting your problems rather raise for their solution and BEGIN JIHAD.

@Kawish

As I have stated the concept of "tragedy of Commons" in my earlier post. The only solution to that problem in traditional economics was the establishment of property rights for that common. It is because, with the establishment of property rights, the rutless exploitation of common will be eliminated as the owner of that common (for example forest, as the owner of forest will take care of existing trees as well as seeding new trees thus forest will not get endangered) will take care of that common.

But that solution was challenged by Ellinor. Through her own observation and subsequent experiments, she gave her own solution to the tragedy of commons. That solution is posted in the earlier post.

Hope it will be clear now.

Regards

Salamze

As far as i have understood Ostrom's thesis, in simplest possible words, it can be told as follows:

Ostrom studied common goods management that lead to better organization and management of public goods (commons), specially in the rural areas. She has worked in Nepal in connection with her studies there of community empowerment and the resultant development. She is a political economist deriving the basis of her ideas from the game theory/ (this last sentence is purely an economic area). Basically her ideas kead to community empowerment as she believes that humans have huge potential for management of public goods provided they are authorized to organize themselves and manage things around them.
This idea may be frther pursued to the community development in the developing countries for purposes fo poverty alleviation and good governance.

Note: These are my personal ideas developed after studying Ostrom's profile and works. Hope this would be helpful for you.

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Zahid Morio

@newstudent
@zahid morio
boundles f thanks to respected members.its really really helpful.
pls explain also how this can b implimented in pakistan to the maximum productive level.thnx again

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aoa all i know what im asking is a very primitive thing for the learnd.me not being that learnd like most of my fellow members expect that they r equally more helpful than i am.so pls help me understanding the uses of this theory for pakistan.in fact i need a debate that would clarify the uses n abuses(if any), n impediments in its implimantation in pakistan.i pray to have an early response thnx a lot.regards

__________________
Stop counting your problems rather raise for their solution and BEGIN JIHAD.

@Kawish

This is not a theory that we can adopt for the development of our economy. Those theories are mainly discussed in the development economics. Actually these are academic debates among economists, for example the theory provided by Ellinor is a new insight into theory of commons. As I have already stated that this theory challenges the old solution for Tragedy of Commons. She has made her contribution by providing new solution. But however which solution will work best, it has yet to be seen. The relative success of any theory will be assessed through empirical analysis. In the above case this theory is new one and we have to wait till the results of empirical investigation.

This theory can be adopted in Pakistan for river water distribution. However it must include the political factors. Economic factors are not the only one that we can consider. In sum we have to see our own environment for application of any economic theory.

I would give you the example of the most famous theories in macroeconomics i.e. Keynesian and Monetarists theories. But there are mixed results of relative success or failures of those theories. So adopting any theory as a policy has to be carefully worked out, and moreover it is not necessary that any one theory will work for us.

Tell you one thing. It can be a PhD thesis for any one who wants to test that theory. It can not be used as theory for debate here, as this forum in not the appropriate place for that. If you are a graduate in economics or political science and want to go for PhD then it can be a good research point. As I am also waiting for empirical results of the above theory.


Regards

@newstudent
thank u sooooooooo much for ur useful post.
im concerned w/ pak's economy n looking for some solutions for its problems.i ll be really really grateful if u cn share something f ur own on the following issues:
a-true current state f eco
b-causes f its problems
c-conventional solutions for them
d-effects f global depression on our economy
i ll be obliged for any help

__________________
Stop counting your problems rather raise for their solution and BEGIN JIHAD.

The current state of economy is not well. The surging debt burden, illiteracy, continued budget and current account deficit, dwindling foreign and local investment, low tax to GDP ratio and even lower tax buoyancy, little savings, decrease in exports growth and poor law and order condition are some symptoms and reasons through which one can imagine Pakistan's economy.

Causes are as numerous as the above problems, however some problems I will discuss below:

1. Bad Governance
2. Lack of consistency in both economic and political policies
3. Poor management of publicly held companies
4. Power and gas loadshedding
5. Illiteracy
6. Continued increase in defense expenditure
7. Concentrated exports with little diversification
8. Improper response of policies (Supply pushed inflation is tried to be controlled by Demand management policies as is evident from our Monetary policy)
9. Little focus (I would say no focus) on reputation and credibility of institutions controlling monetary and fiscal policy (In simple words koi bi pakistan par aitbar nahi karta na apnay na paraye. I know some figures personally what figures actually are and what are represented to IMF and World Bank. Kabi agar aap ko ittefaq ho jab IMF walay yahan attay hain to hamare minister or secretary finance ka kya hal hota hay)
10. Wrong or untimely decisions ( As is evident from Aata and sugar crisis)
11. Selling Pakistan's precious assets at NO price (See what is happening to our Sandak project and God forbid me, I dont know when and what price Thar coal reserviours will be sold to foreigners)
12. Water shortage (Agriculture ka kya hal hoga)

List can go on ......

yehi problems hain or unka solution bi evident hay. You can guess easily.

Hope I be of some help to you.

Regards and Please Please keep praying for me and Pakistan. (I sometimes get so depressed when discussing these problems)