Chapter 7: Institutional innovations in homeowner self-governance: case study of Beijing
With the introduction of private property ownership, homeowners are obliged to take full responsibility for the management of their properties. Given that the overwhelming majority of private residential properties in urban China are multi-owned and many of them are big, the governance of such neighbourhoods is not a trivial issue. The setting up of homeowners' associations to exercise 'self-governance', a relatively novel right granted to homeowners in China, is an important ingredient in the infrastructure of neighbourhood governance. Even in more economically developed countries, neighbourhood governance is still problematic; the private provision of neighbourhood services suffers from problems associated with 'common-pool resources' in which charging users for the use of common resources, and controlling abusive usage, is difficult. In China, interference from the state in the 'self-governance' of homeowners adds further institutional obstacles that hinder the smooth functioning of neighbourhood governance. Yet there is evidence that some homeowners are experimenting with innovative ways to deal with these institutional challenges to self-organization. This chapter will explore two such innovations, the 'Homeowner Representative System' and the 'Trusteeship of Property Management System', and examine their potential to overcome organizational hurdles in self-governance. Principles of institutional design, and analytic tools advocated by Elinor Ostrom, will be employed to analyse and evaluate the conditions under which incentives for collective action can be created without the help of outside authorities or coercive force.
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