Unité mixte de recherche 7235

Manufacturing Markets: legal, political and economic dynamics

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Manufacturing Markets: legal, political and economic dynamics

A workshop to be held in Florence, Villa Finaly, June 11-13, 2009
Organizers :
Eric Brousseau (EconomiX, U Paris X) & Jean-Michel Glachant (ADIS-GRJM, U. Paris XI)

Manufacturing institutional frameworks organizing markets fostering an efficient provision of all kind of private and public goods has been becoming a major challenge for contemporary economic policies. First, political processes of transition to a market economy, or movement of economic integration — like the one that is occurring at the EU level—, or technical change and innovations, have been leading to create and organize all kinds of new markets. Second, the design of efficient markets has been becoming an essential policy tool. Until the 1980’s, the usual remedy to the so-called “market failures” was either the public provision of services, or the design of command and control regulations. The resulting bureaucratic and political failures led to create more sophisticated markets. These innovations even led to run “pure” public policies, as environmental protection or limitation of climate change, through the design of ad-hoc markets. Third, as pointed out by the sophistication, the intertwining, the fluidity, and the stakes of some markets (e.g. finance, energy, information, technology) the issues of crisis management, security of markets and in the end trust in institutional capabilities, has been renewed.

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Significant progresses have been made in the understanding of the building of institutional frameworks, and in the analysis of the impact of institutions on economic performances.  Despite developments in institutional economics, in law and economics and in political economy, there is however a lack of integration of the knowledge necessary to design and run institutional policies aimed at building relevant and efficient frameworks for markets.

Contemporary economics made major progresses in departing from the traditional vision of the discipline in which institutions were exogenous in the analysis, and most of the time given. However, the dominant vision today is still a “mechanical” one. Market institutions are seen as turnkey tools available on the shelves. It is often assumed that a given institutional tool should produce a given economic outcome, with little understanding of implementation constraints and interplay between various tools. More “biologic” visions remain also too crude. Evolutions are too often seen though the lenses of efficient processes of selection of the fittest, and of cumulative learning. In the same time, analyses at the frontier of other disciplines (in particular law and political science) have been highlighting the various logics are at play in the dynamic of institutions. In a nutshell, economic institutions result from the interplay among the economic quest for efficiency, the political fights for strength and rewarding positions, and the legal constraints of security and stability.

It seems therefore relevant to build a framework to analyze the interplay between the economy, the politic and the law.
At least three “levels” of analysis could be relevant to understand the process of market manufacturing. The first one is the one of “markets rights” by which economic agents can access to resources, use them and trade through the combination of “property rights”, “market design” and “market regulations”. Above this level, the “governance” one is the one at which “market rights” are implemented through negotiation and strategic games among various kind of economic, politic and social actors. The third level of analysis correspond to the “Institutional foundations” that set-up the basic rules according to which the “governance” game is played.

Six categories of actors play a fundamental role in these games. The economic arena is structured by the conflicting interests of the users (both consumers and professional users), of the innovators (innovative firms and new entrants) and of the incumbents. The institutional arena is structured by a conflict of logics between policy makers (with a dichotomy between the executive branch and the parliament), the judiciary, and the “market authorities” (i.e. the regulators and the competition authorities, which are characterized by different levels of discretionary and rule making power).
The complexity draws from the fact that all these actors play simultaneously on the three levels, while they do not necessarily rely on the same logic in each arena.

The goal of the workshop is to take stock of the knowledge accumulated over the past years, both about the strategic reactions and games played around regulatory reforms, and about the interplay between political competition, economic life and the law. Contributors will propose synthesis and new developments aimed at contributing to the design of a renewed tool-kit and guidelines for market policies. It will necessitate analytical advances on the governance of markets. Four lines of analysis shall be developed

  1. Most of the market manufacturing interactions described above are driven by interacting logics, namely efficiency, collective interest, stability and security, and rent seeking. It is worth to better understand the factors leading one of these logics to be dominant in various contexts (i.e. different combinations of actors at various levels of institutional design).
  2. The dynamic of market manufacturing comes both from top-down movement of institutional reforms and from bottom-up streams of institutional innovation. It is essential to deepen our knowledge on the interplay between these complementary logics of change.
  3. In the course of market manufacturing, strategies are unstable because the various players learn (both the outcome of a given governance regime and the dynamic of given process of change). It is important, especially to drive reforms, to learn how to benefit from this accumulation of knowledge, and to take into consideration the evolving capabilities of actors.

On the one hand, institutions framing markets are characterized by stability because many feedback loops tend to maintain existing equilibrium. On the other hand, these institutions can be understood as simultaneous equilibra among various games played in interdependent spheres (in the spirit of Aoki), which can be entirely destabilized by an “external” shock. Getting a better understanding of the dialectic between stability (at least, path dependency) and risks of systemic crisis is essential both to understand the strong constraints framing any policy of market manufacturing, and to identify opportunities and paths of reform.


[+/-] Thursday, 11 June

12h30 – 13h45 Welcome lunch

13h45 – 14h00
Opening of the workshop and words of welcome by:
Eric Brousseau (University of Paris Ouest) and Jean Michel Glachant (EUI & University of Paris XI)

Afternoon session: 14h00-18h15

Chair: Stefano Bartolini (European University Institute)

14h00 – 14h45: Jérôme Sgard (CERI/Sciences-Po)
Hyperinflation and the evolution of monetary institutions: Argentina and Brazil, 1990-2002
Discussants: Céline Bignebat (INRA) and Witold Henisz (The Wharton School)

14h45 – 15h30: Craig Pirrong (University of Houston)
Exchanges: The Quintessential Manufactured Markets
Discussants: Laure Athias (IDHEAP / University of Lausanne) and Victor Nee (Cornell University)

15h30 – 16h00: Coffee break

16h00 – 16h45: Mark Thatcher (London School of Economics and Political Science – LSE)
The dynamic of regulatory norms in the EU: a political perspective
Discussants: Adrienne Héritier (European University Institute) and Ashish Velkar (London School of Economics)

16h45 – 17h30: Victor Nee (Cornell University) and Sonja Opper (Lund University)
Markets for Innovation in China
Discussants: Maria Alessandra Rossi (University of Siena) and Jérôme Sgard (CERI/Sciences-Po)

17h30 – 18h15: Michel Aglietta (University of Paris Ouest) and Laurence Scialom (University of Paris Ouest)
A systemic approach in financial regulation – A European perspective
Discussants: Claudine Desrieux (University of Paris I) and Ivan Diaz (European University Institute)

19h00 –19h 45: Concert

20h00: Dinner

[+/-] Friday, 12 June

Morning session: 9h00-13h15

Chair: Adrienne Héritier (European University Institute)

9h00 – 9h45: John Joseph Wallis (University of Maryland and NBER)
Why Competitive Markets Aren’t Self-Actuating: The Political Economy of Open Access
Discussants: Yannick Perez (EUI & University of Paris XI) and Larry Neal (University of Illinois)

9h45 – 10h30: Terry L. Anderson, (Montana State University) and Gary Libecap (University of California, Santa Barbara)
The Allocation and Dissipation of Resource Rents: Implications for Fishery Reform
Discussants: Raphaël Soubeyran (INRA) and Tom Dederwaerdere (Université Catholique de Louvain)

10h30 – 11h00: Coffee break

11h00 – 11h45: Benito Arrunada (Pompeu Fabra University)
Building Market Institutions
Discussants: Eshien Chong (University of Paris XI) and John Joseph Wallis (University of Maryland)

11h45 – 12h30: Denny Ellerman (Massachusetts Institute of Technology)
Air Emission Markets
Discussants: Freddy Huet (University of Nice Sophia-Antipolis) and Gary Libecap (University of California, Santa Barbara)

12h30 – 13h15: Per M. Stromberg (University of Cambridge), Tom Dederwaerdere (Université Catholique de Louvain) and Unai Pascual (University of Cambridge)
Ex situ collections in microbial research: The contribution of public networks to knowledge accumulation
Discussants: Sophie Harnay (University of Paris Ouest) and Denny Ellerman (Massachusetts Institute of Technology)

13h15 – 14h30: Lunch break

Afternoon session: 14h30-18h00

Chair: Yannick Perez (EUI & University of Paris XI)

14h30 – 15h15: Aashish Velkar (London School of Economics)
Measurement Systems as Market Foundations: The role of mensuration in generating economic knowledge
Discussants: Eric Brousseau (University of Paris Ouest) and Manuel Gonzales-Diaz (Universidad de Oviedo)

15h15 – 16h00: Marta Fernández-Barcala (Universidad de Oviedo), Manuel González-Díaz (Universidad de Oviedo) and Emmanuel Raynaud (INRA)
The Governance of Quality: The Case of Fresh Meat
Discussants: Jean-François Sattin (IAE – Valenciennes) and Céline Bignebat (INRA)

16h00 – 16h30: Coffee break

16h30 – 17h15: Antonio Manganelli (University of Siena),  Antonio Nicita (University of Siena) and Maria Alessandra Rossi (University of Siena)
Multilevel competition policy in Europe
Discussants: Laurence Scialom (University of Paris Ouest) and Laure Athias (IDHEAP / University of Lausanne)

17h15 – 18h00: Howard Shelanski (University of California, Berkeley)
American vs European logic in competition policy
Discussants: Adrien de Hauteclocque (University of Manchester) and Antonio Nicita (University of Siena)

20h00: Gala Dinner

[+/-] Saturday, 13 June

Morning session: 9h00-13h15

Chair: Eric Brousseau (University of Paris Ouest)

9h00 – 9h45: Witold Henisz (The Wharton School)
Embedded Neoliberalism: Replacing the False Prophets of Homo Economicus with Homo Therian
Discussants: Freddy Huet (University of Nice Sophia-Antipolis) and Benito Arrunada (Pompeu Fabra University)

9h45 – 10h30: Larry Neal (University of Illinois)
The Microstructure of the First Emerging Markets in Europe in the 18th Century
Discussants: Sophie Harnay (University of Paris Ouest) and Stephen  Littlechild (Judge Business School, U. of Cambridge)

10h30 – 11h00: Coffee break

11h00 – 11h45: Adrienne Héritier (European University Institute) and Yannis Karagiannis (IBEI Barcelona)
Intercontinental regulation of civil aviation : Bargaining and Implementing the Open Skies Agreement” – slides
Discussants: Anne Yvrande-Billon (CAE and University of Paris I) and Leigh Hancher (Tilburg University)
11h45 – 12h30: Leigh Hancher (Tilburg University)
Are the foundations of (EU-energy) market driven by regulation or competition policy?
Discussants: Adrien de Hauteclocque (University of Manchester) and Howard Shelanski (University of California, Berkeley)

12h30 – 13h30: Lunch break

Afternoon session: 13h30-17h00

Chair: Jean Michel Glachant (EUI & University of Paris XI)

13h30 – 14h15: Stephen  Littlechild (University of Birmingham and University of Cambridge)
The creation of a market for retail electricity supply
Discussants: Carine Staropoli (University of Paris I) and Victor Nee (Cornell University)

14h15 – 15h00: Eshien Chong (University of Paris XI), Carine Staropoli (University of Paris I) and Anne Yvrande-Billon (CAE and University of Paris I)
Auction versus Negotiation in Public Procurement: Looking for New Empirical Evidence
Discussants: Leonardo Meeus (Leuven University & EUI) and Frank A Wolak (Stanford University)

15h00 – 15h30: Coffee break

15h30 – 16h15: Shaun D. McRae (Stanford University) and Frank A Wolak (Stanford University)
How Do Firms Exercise Unilateral Market Power? Evidence from a Bid-Based Wholesale Electricity Market
Discussants: Marcelo Saguan (European University Institute) and Craig Pirrong (University of Houston)

16h30: Conclusion of the workshop

Participants list

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Name Surname Institution
AHNER Nicole European University Institute (EUI) – Italy
ARRUNADA Benito Pompeu Fabra U. – Spain
ATHIAS Laure IDHEAP/University of Lausanne – France
BARTOLINI Stephano European University Institute (EUI) – Italy
BIGNEBAT Céline INRA – France
BOULEMIA ANISSA European University Institute (EUI) – Italy
BROUSSEAU Eric EconomiX – U. of Paris Ouest – France
CHONG Eshien University of Paris XI – France
DE HAUTECLOCQUE Adrien University of Manchester – United Kingdon
DEDERWAERDERE Tom Université Catholique de Louvain – Belgium
DESRIEUX Claudine University of Paris I – France
DIAZ Ivan European University Institute (EUI) – Italy
DODLOVA Marina EconomiX – U. of Paris Ouest – France
DUBOIS Ute University of Paris XI – France
ELLERMAN Denny Massachusetts Institute of Technology – USA
GLACHANT Jean Michel University of Paris XI – France
GONZALES-DIAZ Manuel Universidad de Oviedo – Spain
HALLACK Michelle University of Paris XI – France
HANCHER Leigh Tilburg University – Netherlands
HARNAY Sophie EconomiX – U. of Paris Ouest – France
HENISZ Witold The Wharton School – USA
HERITIER Adrienne European University Institute (EUI) – Italy
HUET Freddy University of Nice Sophia-Antipolis – France
LIBECAP Gary University of California, Santa Barbara – USA
LIKIDY Maria University of Paris XI – France
LITTLECHILD Stephen U. of Birmingham and U. of Cambridge
LYARSKAYA Natalia EconomiX – U. of Paris Ouest – France
MEEUS Leonardo Leuven University & EUI
MUNIZ Carlos EconomiX – U. of Paris Ouest – France
NEAL Larry University of Illinois – USA
NEE Victor Cornell University – United Kingdom
NICITA Antonio University of Siena – Italy
PEREZ Yannick University of Paris XI – France
PIRRONG Craig University of Houston – USA
ROSSI Maria Alesandra University of Siena – Italy
SAGUAN Marcelo European University Institute (EUI) – Italy
SATTIN Jean-François IAE de Valenciennes – France
SCIALOM Laurence EconomiX – U. of Paris Ouest – France
SGARD Jérôme Sciences-Po / CERI – France
SHELANSKI Howard University of California, Berkeley – USA
SOUBEYRAN Raphaël INRA – France
STAROPOLI Carine University of Paris I – France
THATCHER Mark London School of Economics – United Kingdom
VELKAR Aashish London School of Economics – United Kingdom
WALLIS John Joseph University of Maryland – USA
WOLAK Frank Stanford University – USA
YVRANDE-BILLON Anne University of Paris I – France

Sponsored by :

Reflexive Governance in the Public interest
(6th European Framework Programme in Research and Development)


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