Quarterly Journal of Austrian Economics

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Open Institutional Structure

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07/30/2014Feng Deng

Volume 14, Number 4 (Winter 2011)

 

By examining several different types of open institutions including open source software, open science and open square, this paper presents a general analysis of open institutional structure that is complementary to traditional proprietary mode. We argue that open institutions are essentially about decentralized production of a collective good that relies on voluntary collaboration of highly variable human-related input that is difficult to identify ex ante. In addition to providing a general definition of open institutional structure, we submit that there are at least two necessary conditions. The first is the integration of consumers into production that provides various non-monetary incentives for the participants. The second condition is ex post voluntary participation that precludes the hold-up problem and transforms the transaction cost problem into a production model. In this sense, open institutions represent a positive approach towards externality and uncertainty.

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Contact Feng Deng

Feng Deng is professor at the Research Center for the Economy of the Upper Reaches of the Yangtze River and the School of Tourism.

Cite This Article

Deng, Feng. "Open Institutional Structure." The Quarterly Journal of Austrian Economics 14, No. 4 (Winter 2011): 416–441.

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