Understanding Institutional Diversity Ostrom 2005

This is a book by Ostrom outlining her approach to analyzing and designing institutions. She will be assigning it in the class in the Fall. It uses results and evidence from everything from field work to game theory, and she introduces a sort of syntax as well.

• p.23:

A key assumption made in the analysis of a competitive market is that the outcomes of an exchange are highly excludable, easily divisible and transferable, and internalized by those who participate in the exchange. Markets are predicted to fail  as effective decision mechanisms when they are the only arena available for producing consuming, or allocating a wide variety of goods that do not meet the criteria of excludability, divisibilty, and transferabili5y.  Market failure means that the incentives facing individuals in a situation, where the rules are those of a competitive market but the goods do not have the characteristics of "private goods," are insuffiicent to motivate individuals to produce, allocate, and consume these goods at an optimal level.