System design

Author: Wei Mo Fei Fang Yu Zhu Bao Qin
Publisher:
Publish Date: 2004-12-01
Features: For a long time, policy scholars have been very concerned with understanding the various basic tools or instruments that governments can use to achieve their goals. Their interest has shifted from initially creating a broad list of general tools for policy analysts to a more selective, yet still useful, effort to explore the components of these tools. The transition from general tools to fully standardized policies requires designers not only to understand the basic components. For example, a Pigouvian tax that internalizes externalities should at least specify the tax base and rate for the tax, as well as the administrative tools used for taxation, and so on. Designers may need to set criteria for specifying these details, such as the tax base and rate, rather than directly prescribing them. The creation of these rules and specifications can be seen as institutional design. I hope that by better understanding the initial motivation behind institutional design, policy analysts will be able to know how to formulate more effective policies. However, you will quickly realize that this endeavor involves many fields of the social sciences. The feasibility and effectiveness of policies depend on their embedded political, economic, and social context. These contextual factors provide an existing institutional environment that offers opportunities and creates obstacles for institutional design. A fundamental understanding of institutional design requires theories of institutions and institutional change. In recent years, with the renewed interest in institutions among sociologists, a large number of potential theoretical sources have emerged. The contributors to this book utilize various resources to confirm the significance of understanding institutional design. Although its practical application contributions are far less than I originally anticipated, I still believe that it offers something valuable to both policy analysts and students in the field of institutional economics, and represents a relatively cautious step forward.