Ostrom - Neither Market Nor State

Question 1

Why neither market nor state?

Answer 1

CPRs are not state entities (although they might involve sanctions and coercion) and not market institutions (although they involve buying and selling resource units)
→ enhancing capabilities of local organizations of those who are concerned with the local situation is a more successful strategy (no one in a nation’s capital can develop the full array of social capital needed to govern and manage CPRs sufficiently)

Question 2

What is a common pool resource?

Answer 2

natural or human made facilities (or stocks) that generate flows of usable resource units over time
(they have a stock and flow aspect)

Question 3

What is an open-access resource?

Answer 3

lacking effective rules regarding access and use patterns -> always subject to overuse and potential destruction -> designing effective rules to govern and manage is difficult

Question 4

What are the two characteristics of CPRs?

Answer 4

1. it is costly to develop institutions to exclude potential beneficiaries from them (feature shared with public goods) → non-excludable
2. the resource units harvested by one individual are not available to other (feature shared with private goods) → rivalrous

Question 5

What are design principles?

Answer 5

a conception used by individuals about a general organizing principle to undertake the day-to-day management of their resources

Question 6

What are the 8 design principles?

Answer 6

1. Clearly defined boundaries
2. Congruence between Appropriation and Provision Rules and Local Conditions
3. Collective-Choice Arrangements
4. Monitoring
5. Graduated Sanctions
6. Conflict Resolution Mechanisms
7. Minimal Recognition of Rights to Organize
8. Nested Enterprises

Question 7

Explain the 1st design principle: Clearly defined boundaries

Answer 7

Boundaries of the CPR and of those authorized to use it (without them local users face the risk that any benefits they produced will be reaped by others who did not contribute)

Question 8

Explain the 2nd design principle: Congruence between Appropriation, Provision Rules and Local Conditions

Answer 8

Rules restricting time, place, technology or quantity of resource units and provision rule requiring labor, materials and money

Question 9

Explain the 3rd design principle: Collective-Choice Arrangements

Answer 9

operational rules are customary law, but the community can change them without help from legislators

Question 10

Explain the 4th design principle: Monitoring

Answer 10

audit CPR conditions and user behavior

Question 11

Explain the 5th design principle: Graduated Sanctions

Answer 11

Users who violate the operational rules are likely to receive graduated sanctions

Question 12

Explain the 6th design principle: Conflict Resolution Mechanisms

Answer 12

users and their official have rapid access to low-cost, local arenas to resolve conflicts; mechanisms for discussing and resolving are necessary to the continuance of rule conformance itself

Question 13

Explain the 7th design principle: Minimal Recognition of Rights to Organize

Answer 13

the rights of users to devise their own institutions are not challenged by external governments

Question 14

Explain the 8th design principle: Nested Enterprises

Answer 14

rule 1-7 are organized in multiple layers of nested enterprises; smaller organizations tend to be nested in larger organizations

Question 15

What is physical capital?

Answer 15

the stock of material resources that can be used to produce income

Question 16

What is human capital?

Answer 16

acquired knowledge and skills that any single individual brings to productive activity

Question 17

What is social capital?

Answer 17

shared knowledge, understanding and patterns of interaction that a group of individuals brings to any productive activity
→ individual trust another, rely on reciprocity