Markets, Networks and Hierarchies
New Horizons in Institutional and Evolutionary Economics series
Edited by Olivier Favereau and Emmanuel Lazega
Chapter 3: Institutional embeddedness of economic exchange: convergence between new institutional economics and the economics of conventions
Christian Bessy Certain developments in new institutional economics (NIE) over the past few years have created areas of overlap with the French school of thinking called ‘Economie des Conventions’ (economics of conventions, EC) on the question of the institutional embeddedness of economic exchange and its type of organization. Since the work of Williamson (if not of Coase), the comparison between different coordination mechanisms or organizational forms, depending on the characteristics of the institutional environment and, more analytically, the hypothesis of ‘bounded’ rationality, have constituted research perspectives common to both approaches. In his work on institutional change, North’s interest in the part played by ‘informal’ institutions (conventions, behavioural norms and so on) caused him to move further away from neoclassical economics (North, 1990). More recently, the emphasis on the articulation between cognitive processes and institutions (Knight and North, 1997) has brought him even closer to the research programme of the economics of conventions. These new perspectives initiated by NIE can be considered as slight divergences which are unlikely to fundamentally undermine the initial embeddedness of the neoclassical tradition, other than as ‘ad hoc’ additions (Guerrien, 1990), so that many divergences remain with the economics of conventions. The aim of this chapter is not, however, to list the similarities and divergences of the two approaches – which both show a degree of heterogeneity when we move away from the broad lines of the founders1 – but to identify the main similarities, taken from the most recent work of North, for NIE, and certain representatives...
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