"Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behavior."
The study of how economic institutions are created, sustained, and transformed over time, and the role they play in economic behavior and outcomes.
Markets: Markets are institutions where buyers and sellers interact to exchange goods and services. Economic institutions use markets to organize and coordinate economic activities.
Property Rights: Property rights define who can use a good, under what conditions and circumstances, and for how long. Economic institutions regulate property rights to avoid conflicts over the use of resources.
Contracts: Contracts are the legal agreements that govern the relationship between two or more parties involved in an economic transaction. Economic institutions use contracts to stipulate the terms and conditions of economic activities.
Firms: Firms are economic institutions that coordinate the production and distribution of goods and services. Economic institutions use firms to provide a stable institutional framework for economic activities.
Financial Institutions: Financial institutions are institutions that facilitate the flow of capital, credit, and money in an economy. Economic institutions use financial institutions to regulate the supply and demand of money and capital.
Government: Government is an important economic institution that plays a significant role in coordinating economic activities. Economic institutions use government to develop public policy and regulate economic activities.
Society: Social institutions such as culture, religion, and legal systems also play an important role in shaping economic institutions. Economic institutions work with social institutions to create a favorable institutional framework for economic activities.
International Relations: International institutions, such as the World Trade Organization, International Monetary Fund, and World Bank, are also critical in shaping economic institutions. Economic institutions work with international organizations to facilitate trade, investment, and economic growth.
Innovation: Innovation is a critical component of economic growth, as new products, services, and technologies often create new economic institutions. Economic institutions work to encourage innovation through research and development, patent and copyright laws, and investment in emerging technologies.
Power and Authority: Power and authority play a significant role in shaping economic institutions. Economic institutions work to balance power and authority between different economic actors to avoid monopolies, promote competition, and ensure economic fairness.
Markets: These are the institutions where buyers and sellers exchange goods and services, and prices are determined by supply and demand forces.
Corporations: These are legal entities that are separate from the owners and can raise capital by issuing stocks or bonds. They are run by a board of directors and aim to maximize shareholder wealth.
Banks: These are institutions that provide financial services such as lending, deposit-taking, and investing.
Non-profit organizations: These are institutions that are not driven by profit motives but instead aim to provide social services, educational opportunities or support other humanitarian-oriented objectives.
Cooperatives: These are member-owned businesses that provide shared economic benefits, enabling the individual owners to gain from the economy of scale.
Unions: These are organizations that aim to protect and represent the interests of workers, typically engaged in collective bargaining negotiations.
Government: This is a public institution that sets policies, regulations, and taxes that impact the economy and its components.
Insurance companies: These institutions provide a consumer with a range of insurance products such as auto, home, and health to protect against financial risks.
"Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the 'ceremonial' sphere of society on the other."
"Its name and core elements trace back to a 1919 American Economic Review article by Walton H. Hamilton."
"Institutional economics emphasizes a broader study of institutions and views markets as a result of the complex interaction of these various institutions (e.g. individuals, firms, states, social norms)."
"Traditional institutionalism rejects the reduction of institutions to simply tastes, technology, and nature."
"Tastes, along with expectations of the future, habits, and motivations... determine the nature of institutions."
"If people live and work in institutions on a regular basis, it shapes their world views."
"Institutional economics focuses on learning, bounded rationality, and evolution (rather than assuming stable preferences, rationality, and equilibrium)."
"Thorstein Veblen, Wesley Mitchell, and John R. Commons."
"Because he described capitalism as a historically bounded social system."
"A significant variant is the new institutional economics from the later 20th century."
"The role of law (a formal institution) on economic growth."
"John R. Commons published the Legal Foundations of Capitalism in 1924."
"Behavioral economics is another hallmark of institutional economics based on what is known about psychology and cognitive science."
"Robert H. Frank, Warren Samuels, Marc Tool, Geoffrey Hodgson, Daniel Bromley, Jonathan Nitzan, Shimshon Bichler, Elinor Ostrom, Anne Mayhew, John Kenneth Galbraith, and Gunnar Myrdal."
"Even the sociologist C. Wright Mills was highly influenced by the institutionalist approach in his major studies."
"Its name and core elements trace back to a 1919 American Economic Review article by Walton H. Hamilton."
"John R. Commons emphasized the legal foundations of an economy."
"Traditional institutionalism focuses on the evolutionary, habituated, and volitional processes by which institutions are erected and then changed."
"It emphasizes learning, bounded rationality, and evolution (rather than assuming stable preferences, rationality, and equilibrium)."