2014 Awards (ISNIE)

Oliver E. Williamson Best Conference Paper Award

Jenny Guardado, New York University
Land Tenure, Price Shocks and Insurgency : Evidence from Peru

This paper examines which types of land tenure arrangements lead to violence. The paper examines the insurgency and violent attacks by the Peruvian guerrilla and government army between 1990 and 2000, exploiting exogenous variation in the agricultural incomes of Peruvian coffee producers to compare how they affect violent outcomes in districts under different property arrangements. Using detailed data on district level land tenure and violence, the paper finds that negative price shocks leads to an overall increase in violence, particularly from guerrillas. Yet, such spike in violence is unchanged in districts with a prevalence of individual ownership and smaller for districts under communal arrangements. The paper suggests that forms of shared ownership may better attenuate income shocks from international markets. An examination of the mechanisms at work shows that negative price shocks led to a higher rate of unemployment in ownership areas than in communal land tenure districts. Consistent with this interpretation, coffee price shocks only have an effect on violence at times when coffee is not being harvested, hence unemployment is larger.

Ronald H. Coase Dissertation Award

Meina Cai, University of Connecticut
Land-Locked Development: The Local Political Economy of Institutional Change in China

Meina Cai examines the political economy of land reform in China. In particular, she examines how local governments are able to create de facto property rights to land, despite the prohibition on private land ownership. “Flying Land” is the practice of local government trade in land quotas. These trades move land rights to their higher valued uses, and generate wealth for the local governments and land developers. Although conflicts between peasants and governments arise, overall the practice is argued to be wealth generating. Cai argues her case through detailed case studies and the examination of two data sets (one she collected herself).

China presents a challenge to institutional thinking. Despite the resistance to western economic institutions, China has experiences rapid growth over the past 30 years. Cai’s work demonstrates one channel by which this growth may be accomplished. By creating effective land rights within the shadow of the federal law, local governments are able to mitigate the negative consequences of land ownership restrictions.

Cai’s dissertation is highly original, and is built on a tremendous amount of work. It reflects a detailed understanding of the ground-level institutions that ordinary Chinese citizens operate under, and convincingly shows how ingenious local governments can be when they are able to benefit from economic development. Cai’s work takes us one step closer to understanding the economic transformation of China in the face of what looks like institutional road blocks to growth.

2014 Ronald Coase Dissertation Prize, Honorable Mention

John Moore, Sorbonne Business School
Discretion and Manipulation in Public Procurement: Evidence from France

The 2014 awards committee would like to acknowledge the excellent thesis of John Moore. His dissertation was made up of four empirical chapters that investigate the linkage between discretionary power on the part of public buyers and the manipulation of public procurement. Discretion allows buyers to act unrestricted to the benefit of the administration, but also opens the door for potential moral hazards and corruption. In general he finds that increased discretion helped to reduce collusion and did not lead to more corruption.

Douglass C. North Research Award

Douglas W. Allen, The Institutional Revolution, University of Chicago Press, 2012.

Robert Gibbons and John Roberts, The Handbook of Organizational Economics, Princeton University Press, 2012.

Although very different in nature and structure, both books demonstrate a deep investigation into the nature of institutions and organizations.

Allen’s book takes a host of behavior from 17th to 19th century Britain inexplicable or irrational to modern eyes, things like dueling, drawing and quartering as a judicial punishment, or the sale of military offices. As Allen says, if these institutions survived for centuries, they must have been providing some way for individuals to solve problems that the larger society could not provide. Drawing together a network of examples, he provides a way to see the institutions as solutions to problems of information and measurement costs in an era when transaction costs were high and public capacities low or non-existent.

The Gibbons and Roberts Handbook is a compendium, all 1248 pages worth, of articles on the myriad aspects of organizational economics. A long time in the making, several of the papers are already standard references in the literature. The quality of the contributors is exceptionally high for an edited volume. Bringing together all of this work in one place, with a consistent and accessible editorial style is a major accomplishment that serves us all well.