Contribution in an anthology

Appeared in: How effective is the invisible hand? : Agricultural and food markets in Central and Eastern Europe

Editor list: Brosig, S.; Hockmann, H.

Publication year: 2005

Pages: 95-114

ISBN: 978-3-938584-03-3

URL: http://nbn-resolving.de/urn:nbn:de:gbv:3:2-4087

Title of series: Studies on the agricultural and food sector in Central and Eastern Europe

Number in series: 31

Abstract: 

This paper discusses the difficulties, in transition economies, of grounding the paradigm of the invisible hand on a balance between exclusion and governance. It argues that pure property rights are not the solution to the problem of finding optimal institutions in the food sector of transition countries. A society that is faced with high transaction costs and the modulation of benefits from rent seeking may seek a mixture of exclusion and governance. Drawing from the proposition of Henry Smith, that precision in the development of rights is the core issue of institutional and technological change, it is suggested that the transition of the food sector cannot avoid involving administrative activities that direct the change. Searching for institutions that promote adaptation to local resource and technology problems and that provide innovative solutions, an invisible hand paradigm based on pure exclusion, is considered inefficient. This view is supplemented by the findings of Saleth and Dinar, who have shown that a subjective interpretation of institutions and ideology plays a major role in promoting successful transition and technological innovation in the water sector.

Harvard Citation style: Nuppenau, E. (2005) How effective is the invisible hand on technological and institutional change and the reduction of transaction costs in the food sector?, in Brosig, S. and Hockmann, H. (eds.) How effective is the invisible hand? : Agricultural and food markets in Central and Eastern Europe. Halle (Saale): IAMO, pp. 95-114. http://nbn-resolving.de/urn:nbn:de:gbv:3:2-4087

APA Citation style: Nuppenau, E. (2005). How effective is the invisible hand on technological and institutional change and the reduction of transaction costs in the food sector?. In Brosig, S., & Hockmann, H. (Eds.), How effective is the invisible hand? : Agricultural and food markets in Central and Eastern Europe (pp. 95-114). IAMO. http://nbn-resolving.de/urn:nbn:de:gbv:3:2-4087