2000, Volume 3, Paper 37
ISSN: 2209-6612

Institutions and Policy Analysis

Robin Johnson

Summary

Institutional analysis is associated with the work of Buchanan, North and Williamson. It lays stress on the constitutional arrangements for the conduct of commerce and property rights. Institutional analysis focuses on transaction costs and their effect on organisational efficiency. In recent years, the work of Dixit and Horn has drawn attention to the potential in policy making and bureaucratic organisations for such an approach. This paper reviews the work of these authors in this area and outlines its application to a strong feature of the Australian and New Zealand economies – commodity marketing boards. It is suggested that marketing boards are a form of semi-government organisation that minimise certain transaction costs that would otherwise have to be carried by central government. It is pointed out that the particular form of organisation legislated for both in Australia and New Zealand transfers the significant cost of monitoring the activities of such boards to the producers themselves with consequent weakening of any control relationship with the legislature which created them.

Key Words: Institutional environment, transaction costs, policy formation and implementation, marketing boards.

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