ARTICLE TITLE: Choosing Between Discrete Institutional Alternatives: What Do We Compare?
AUTHORS: Shastitko A.
ABSTRACT: The paper deals with the issues: how to make a theory more practically relevant without the loss of its generality and which approaches used in modern research on economic organization with the application of new institutional economics instruments could be qualified as the “missing link” to resolve the first problem. The “missing link” is presented by a combination of the comparative analysis of discrete institutional alternatives and the potential of institutional design on different levels of interaction between economic agents and their groups, taking into account the differences between an institutional set of economic exchanges and an institutional boundary of exchanges, as well as the differences between compensating and eliminating the failures of institutional arrangements used to organize economic exchange. Based on a simple scheme of operationalizing the comparative analysis of second-order imperfect discrete institutional alternatives, two examples illustrating the proposed research approach are analyzed.
KEYWORDS: discrete institutional alternatives , market failures , state failures , market failures compensation , market failures elimination , large-diameter pipes , contracts with a currency price component