Week 1

Regulating Networks in the New Economy

The regulation of network industries has undergone profound transformation in the past
twenty years. The regulated industry is no longer the same, being exposed to new
competitive dynamics having revolutionized their industrial framework, technology and
interactions with users. There also have been fundamental changes in what regulation is
feasible. In an “information society” a model devised in the 19th century to set prices for
monopoly infrastructures such as bridges, roads and railways no longer captures the
essential: the interactive dynamics created by technologies, uses, and markets.

Structural change: processes are organized into ‘modules’ articulated around ‘interfaces’ that
buffer the separability of their internal design and operation, while simultaneously ensuring
their precise coordination in the execution of vast, multi-task and multi-agent programs →

has infiltrated the structure of markets and goods, displacing the old ‘Fordism-Taylorism’
paradigm with a new one of ‘Mass consumption”.

1. New Information and Communications Technologies (NICT): these technologies

undergird a real information-based monitoring of new processes and new services

and goods. Today the wealth of information provided by Information &

Communication Technologies makes it possible to envision new arrangements that
are feasible and Pareto-improving, encompassing the many cases of the ‘failure’ of
traditional markets. → ICT increase the informational potential and facilitate
monitoring ‘complex’ operations by providing various forms of control and evaluation
for new processes.
2. The ongoing fluidity of technological, industrial, and organizational innovation,
commercialization by professionals, and application by users (B2B, B2C)
3. It is the modular nature of the processes. This modularity organizes the separability
of tasks and changes around interfaces defined as standardized points of entry, or
gateways. However, this process modularity creates challenges with adaption that
are similar for operators and the agents of change all along the chain of modules and
interfaces affected by waves of innovation between technology, industry,
commercialization and use.
→ The regulator and regulation may take advantage of these sequences of adaptive delays
to carve out a role for themselves in the chain of modular innovations. Regulators and

regulation can open forums on ‘production in the public sphere’.

→ In keeping with common practice among economists, we focus on modifications affecting

the essence of regulatory activity. Four themes in the remaking of regulation:

 1. A renewed interest in allocating the monopoly’s fixed costs among the various actors
and users.
2. Account is taken of property rights as the new ‘essential’ institutional decision making
infrastructure in these complex multi-task and multi-agent environments.
3. Account is taken of all new modalities for managing network externalities.
4. Producing the ‘public weal’ and public standards through regulatory activity.

Monopoly fixed costs

In the past fifteen years, the emergence of new technologies that make strong and nearly
exhaustive traceability of infrastructure usage possible has raised hopes for the dawn of an
era of intelligent regulation, finally based on data that is entirely objective. Numerous
improvements, linked to the power of databases and computational ability, today allow short-
term marginal costs to be assessed on a horizon approaching real time on electrical grids.

Allocation of property rights

It is apparent that the operation of new, unregulated infrastructures needs to be coordinated
with the general functioning of pre-existing regulated networks. This involves defining rules
for interconnection and interoperability. These rules could be negotiated between the various

operators or imposed by an authority. In principle, the regulator continues to play a key role
in the property rights regime of all stakeholders. → regulator retains a role in defining and
allocating access and usage rights amongst the actors.

Negative Network Externalities

Negative network externalities primarily consist of congestion, accidents, and the provision
of security for transactions. The regulation of negative externalities has occurred on a much
smaller scale, often national. It is incumbent on the regulator to define the general rules for
managing congestion and security since, practically, congestion management amounts to
allocating a scarce resource (network access) between alternative uses. In conclusion, in
the old regulatory economy most negative externalities were internalized into an integrated
operational chain. This integration of network and user services operations, as well as the
integration of externalities management with the definition of rules under which they are
managed, have disappeared in the new economy.

Positive Network externalities

Positive externalities result from ‘nonexcludability’ in property rights. On the supply side,
these are mostly interconnection and interoperability and, on the demand side, club good
effects and the impact of an increased variety of complementary goods.
→ a planned reallocation of property rights can internalize them in new expanded rights, such
as the rebundling of up and downstream decision units.

→ the opening of standards for network operation makes technological innovation and
competition possible.
→ regulators must safeguard the ‘open’ nature of networks by supporting the process of
developing open standards, while also controlling the exercise of market power by operators

who dominate the dynamics of elaborating standards.

The public good

The activity of the regulator is always constrained by informational asymmetry between her
and other economic agents.

Conclusion
By the lower information costs made possible by NICTs and by embedding of knowledge
required to understand the challenges associated with innovation and, finally, by the
modularity of production and use processes in network industries.

In the open process of generating public rules, the various stakeholders need to organize,
whether to promote their own interests or to seek to build coalitions and capture the
regulation.

Among all these new elements, the element that is most innovative and structuring appears
to be the role of the regulator in constructing open forums for the revelation of information
and knowledge. These arenas organize an active meeting of rival interest groups to define
actions and operations with public legitimacy.

Governance of Competition and Performance in European railways: An analysis of

five cases
This article discusses the liberalization of the railway industry in Europe. We want to know
whether liberalization leads to better performance of the railway systems.

Three modes of competition in railway sector:

- competition in the market
- competition in the market between train operating companies with regulated access
to track infrastructure
- competition for the market between rail companies

While costs had gone down and traffic increased, there is still a lot of uncertainty about the
best institutional approach to railway liberalization.

As long as we rely on quantitative performance data alone, we can do no better than

speculate about the reasons for such a weak link between changes in institutional
arrangements.

In each country we have observed a growing number of actors, which have resulted both
from competition, subsequent regulation, and regionalization. The railway sector is becoming
more and more fragmented, not to mention more complex.

Week 2
A general Framework for regulation and liberalization in network industries
Traditionally, most network industries used to be dominated by state-owned regulated
monopolies. Lately, governments have started liberalizing their network industries, for
Discuss these
example: telecommunications, postal services, electricity and transport. Four types
In parallel with liberalization, sector-specific regulation in network industries has become a

widely discussed topic → is it necessary and if so what is the optimal design?

If there is no market failure, there is no need to intervene. If the market fails persistently and
government chooses to intervene, it establishes regulations. If the regulated situation still
fails when confronted with the socially desirable outcome - re-regulation is needed.

→ The only market interventions that are economically justifiable in perfect markets are lump
sum transfers aimed at redistribution. In practice, markets are hardly ever perfect.

Perfect market:
1. Any company or consumer in the economy acts as price-taker → there is no
bargaining or market power

2. Markets are complete, there exists a true price for any good → there are no
externalities
3. Information is symmetrically distributed (no asymmetric information) and there are no
transaction costs.
→ Market failures = situations in which some of the assumptions of the welfare theorems do
not hold and in which market equilibria cannot be relied on to Pareto optimal outcomes. →
sector specific regulation is needed.

- Any new sector-specific regulation in question should be based on deviations of the

perfect markets assumptions leading to (potential) market failures with harmful
effects on overall welfare.
- New regulation should be introduced only if these failures are not sufficiently tackled
by general regulations or prevailing sector specific regulations
- The new regulations should clearly improve the situation with respect to potential
regulatory failures.

Three dimension of market failures:

1. Market power: Companies do not act as price-takers if they have market power. IN
such cases they are able to profitably alter prices away from competitive levels
without provoking new market entries or other interactions that force prices back.
a. Legal barriers prohibit new entrants to access markets (market access
regulations). for example: state monopoly. Price regulations are popular
b. Strategic barries to entry arise by conduct. The behaviour of market players,
for example a cartel, can lead to market power that in turn can be used for
anti competitive and welfare-decreasing practices. Tackled by competition
law.
 c. Natural barriers arise where the cost structure of an industry leads to stable
market power. → sector specific regulation might be appropriate.
2. Externalities : actions can have positive or negative externalities on other agents.
a. Network externalities among users: The utility of a user increases with the
number of users connected to the network (FB)
b. Externalities between market sides: the existence of an installed base, which
makes entering a market attractive if interconnection is available. Negative:
advertisement.
c. Network externalities between various operators
d. Externalities onto other sectors of the economy: A new train service will boost
a region’s economic activity in many aspects.
3. Other important imperfections : asymmetric information
a. safeguarding demand

Liberalization is a change of market access regulations towards a more entry-friendly

regime.

Regulation:
- Price regulation
- Access regulation
- Seperation

Levels of regulation:
- level 0: no regulation: usually the case if there is no stable monopolistic bottleneck or
there is no misused market dominance.
- Level 1: Price-cap regulation of existing access prices to a bottleneck resource on
the basis of separate accounts
- Level 2: Ex post acces regulation. This implies a subsidiary competence of the
regulator to enact regulations if competing operators cannot agree on access
conditions. (primacy of self-regulation)
- Level 3: Ex ante access regulation. This results of such a regulation are the more
incisive the larger the regulators discretion in defining the scope of the regulation.
- Level 4: Functional separation
- Level 5: Structural separation
- Level 6: Nationalization → governmental monopoly

Hence, the key question regarding market access is whether a free market would lead to an
outcome less efficient than a regulated monopoly.

One the one hand, monopolies usually impair innovation, cost awareness and customer
friendliness. On the other hand, monopolies can provide important investment incentives,
are a financing means for poli-cies such as universal service obligations, and might be
straightforward where the natural market characteristics tend to monopolize the market.
Hence the optimal answer on how to regulate market access will vary not only from sector to
sector, but also from country to country.
How to make a European integrated market in small and isolated electricity systems?
How to achieve a suitable internal market for electricity in small and isolated systems?

Since the early 1980’s, an increasing number of articles in the economic literature have been
advocating vertical disintegration and the replacement of common property across
generation.

→ the restructuring of electricity markets in Europa was triggered by the EC; common
electricity market. This would result in lower prices for the whole of Europe and increase its

price competitiveness.

The introduction of competition in small isolated systems involves a series of hurdles.

Nevertheless, a partial introduction is possible if a suitable regulation model is designed
correctly. The most obvious way is by connecting with other, larger systems. However, when
this is not possible, there are other feasible alternatives if the electricity systems are of an
intermediate size.
- the creation of this type of market is incompatible when there is a monopoly in
generation. To create a wholesale market it is necessary to apply some type of
enforceable measure. For example, the possibility of establishing a limit for the
current producer, or positive discrimination in favour of companies
- There exist other competitive mechanisms, like the possibility of establishing bilateral
contracts between producers and supplier companies or qualified consumers.
- The safety requirements established by regulatory bodies must not be so stringent as
to entail high costs, which could constitute a barrier of entry.

Week 3
Beyond Markets and States: Polycentric Governance of Complex Economic Systems
Institutional arrangements for governing common-pool resources and public goods.

Assumptions in 1950:
- Two optimal organizational forms: market was for private goods and non-private
goods needed the government
- Two types of goods: pure private goods and public goods.

Polycentricity to understand whether the activities of an array of public and private agencies
engaged in providing and production of public services in metropolitan areas were chaotic,
or a productive arrangement.
Moving away from the presumption that the government must solve all common-pool
resource problems while recognizing the important role of governments is a big step forward.
We need to ask how diverse polycentric institutions help or hinder the innovativeness,
learning, adapting, trustworthiness, levels of cooperation of participants, and the
achievement of more effective, equitable, and sustainable outcomes at multiple scales.

UK Local Authority engagement with the Energy Service Company model

How opted UK authorities to engage with the Energy Service Company to enhance their
influence over local energy system change and help them to deliver on their political public
good objectives.

UK authorities entered the energy market by engaging with innovative business models to
help them perform a more active energy governance rol. This move stems to shape local
energy system developments in a way that enables them to deliver on their political public
good objectives, such as tackling fuel poverty or improving the local environment.
Consequently, a variety of novel actor configurations between public, private and third sector
organisations have started to emerge. This move towards multi-actor local governance
systems is nuanced from the pre-war tradition of municipal ownership of local energy
infrastructure and all-together different from the highly centralised, market-led governance
approach that prevails today in the UK.

1. Establishing its own ‘arms length’ ESCo that is owned and operated by the LA
2. Entering into a concession agreement with an existing private sector ESCo to deliver
local energy projects
3. Partnering with a community ESCo that shares similar objectives to improve the well-
being of the local community.
→ all three approaches have their own merits and limitations.

Greenpeace - Decentralising power

Reform of the centralised electricity system is urgently needed, to put an end to this
environmentally destructive wastage. A decentralised energy system has two key
characteristiscs:
1. Buildings double up as power stations because they have within them one or more
energy generating technologies such as solar panels, wind turbines. Local impact is
important.
2. Local energy networks will proliferate, distributing heat and power.
Week 4
Net Neutrality: A fast lane to understanding the Trade-offs
This article discusses whether an internet service provider should be required to treat all
data from all content providers in the same way, and generally argues that net
neutrality is good for the internet. This article provides a guide to the literature analyzing
the economic trade-offs shaping policy choices.

Net Neutrality = to prohibit payments from content providers to internet service providers.
prohibiting prioritization of traffic, with or without compensation.
- rules to limit the right to block traffic
- rules for limiting discriminatory treatment
- rules for defining minimal transparency requirements for internet service providers

There are a number of open research questions in this setting because the situation involves
multiple participants in complementary economic relationships where they share the costs
and benefits of actions, and users benefit from improvement and investment.

The challenges of fractionalized property rights in public-private hybrid organizations

Policy designers are creating organizations with fractionalized property rights that distribute
ownership among public and private actors. The resulting hybrids are quite diverse, including
mixed enterprises, public-private partnerships, social entrepreneurship organizations,
government-sponsored enterprises.

Because these multiple owners have different goals, hybrids face greater risks resulting from
goal tension among owners and managerial dissonance about how to respond to the
tension.

To understand public-private hybrids, we assess them in terms of six dimensions of property

rights: fragmentation of ownership, clarity of allocation, cost of alienation, security from
trespass, credibility of persistence, and autonomy.

The cross-sector fractionalization typically creates tension over goals that must be
accommodated in some way, usually through cognitive dissonance resolution that allows
managers to embrace one of the goals as dominant.

Owners and managers of public-private hybrids face a number of problems flowing from
ownership fragmentation.First, the managers face a trade-off between the market value of
the organization and public purposes. Relatedly, the public sector goal or goals may be
vague and open to a multiplicity of plausible interpretations.

- In terms of the three common forms of public-private hybrids we considered, MEs

pose the least risk of catastrophic failure – in competitive markets in developed
economies they are likely to be less efficient and profitable than private firms but
more efficient than public organizations. Further, they are unlikely to fail outright
because the structure of their ownership can be relatively easily manipulated by
government sales or purchases of stock. Overall,relatively feasible design efforts can
 often create MEs that can be good alternatives to public organizations and, in some
circumstances, to outright privatization. (mixed enterprises)
- Public-private partnerships pose a substantial risk of failure, either in terms of
bankruptcy by the private partneror politically expedient buyouts by the government
to negate opportunistic behavior in tolling or other aspects of operation directly
relevant to citizens. Although they can be designed to be effective, their complexity
and longtime-horizons make doing so very difficult. As their political attractiveness
often outpaces design capacity, they often are bad alternatives to the more traditional
contracting arrangements used by government organizations to create infrastructure.
- Government sponsored enterprises also pose a risk of catastrophic failure that may
require bailouts if they have strong vested interests or network centrality that prevent
liquidation. These risks of catastrophic failure may or may not be realized. However,
they should be recognized and taken into account by organizational designers.
Whether Ultimately good or bad in terms of efficiently promoting substantive public
values, GSEs may ultimately be ugly in terms of the political influence they create.

Week 5
Use of combinatorial auctions in the railway industry
Rail capacity is currently administratively allocated in Europe, whereas the economic
literature has often contemplated the opportunity of introducing market mechanisms,
auctions in particular, into this industry. This article shows that the rail capacity must be
allocated through combinatorial auctions. Combinatorial auctions introduces a lot of
complexity (winner determination and information burden) into the allocation process. To
deal with this complexity, some form of centralized planning is necessary to design the right
market mechanisms and to allocate capacity.

In other words, to use the distinction made in the second section and to reply to the title
question, the invisible hand cannot draw the timetable, but it can sell some of the individual
paths (or bundles) once the overall timetable is set.

Aligning modes of organization

This paper is about the alignment of technology and modes of organization in infrastructures
in the context of their reform. Since infrastructures are characterized by strong technical
complementarities, we explore the resulting ‘critical technical functions’ that need to be
performed in order to guarantee the expected technical performance of the system.

Not all transactions have the same status. For instance, trains with rights of access must be
monitored by a traffic control centre in order to guarantee safety, while they can very well run
without an entity selling tickets (public authorities can decide it is free). We call critical
transactions those transactions essential to accommodate critical control mechanisms. A
failure in critical transactions threatens the capacity of the system to maintain one of the
critical control mechanisms.

Water could not be delivered to households without adequate control of the pressure in the
interconnected pipe system. Trains could not interconnect if the rail system differs in width or
in the type of energy required. Electricity networks could not function as an interconnected
system without load balancing between production and demand of electric power. In other
terms, critical technical functions impose certain characteristics to the organization of
relevant transactions, usually pushing towards integration or towards tight control through a
strategic centre.

Beside the effects on transactions due to technical factors of critically, there are indeed
critical effects related to the way the economic viability of the system is organized. For
example, if a contract does not determine prices guaranteeing adequate return on capital,
underinvestment follows, eventually to the point the system collapses.
- Highly specific investments that infrastructures require must be made on critical

assets of the system → power plants in electricity or pumping stations in water.

- Some transactions may face risks of opportunists, usually will be made only if
transactions are organized in a way that provides safeguards against risks of
opportunism, usually under the form of integration or long-term contracts.
- The identification of critical transactions must take into consideration strategic
behaviours: some parties may have an interest in defending that a transaction is
technically critical because this preserves their monopolistic position.
- The key technical functions of control mechanisms require room for particularly
powerful incentives.

→ both technical-control and organization-specific dimensions of critical transactions should

align with critical technical functions, pushing either towards integration, so that a unified
organization secures the requirements of criticality or towards hybrid arrangements, with a
strategic center coordinating parties that are simultaneously complementing each other and

competing. As a result, complex modes of organization emerge.

Often institutional reforms neglect the technical dimension of infrastructures as well as the
organizational requirements as possible barriers or drivers for change. This can result in
inferior technical performance, in some cases even resulting in major accidents like
blackouts in the electricity sector, accidents in rail transport or substantial leakages in water
systems.

Since infrastructures are characterized by strong technical complementarities, there is a

need to sustain and harmonize technical processes that are physically interlinked through
networks.

Our analysis points out that different infrastructures imply different critical transactions. The
successful restructuring of infrastructures strongly depends on the capacity to align technical
functions and the modes of organization by properly identifying critical transactions.

Interrelated technical and institutional coordination: The case of network

infrastructures
Literature barely addresses the interrelated coordination of technical processes and
economic transactions. Yet for network infrastructures, which are undergoing fundamental
technological and institutional changes, it is a prominent issue.

Important drivers include advances in ICT and ongoing institutional restructuring, allowing for
modularization of services and competition between providers.

Such innovations contribute to a modularization of the provision and use of

infrastructure services, The so-called ‘unbundling of the operation of networks from the
actual provision of services. Unbundling Allows for competition between different
service providers, while grids remain regulated monopolies,safeguarding a level playing
field.

Three areas of research are proposed:

1. Identification of different interrelations between technical features of network
infrastructures and corresponding rules and rights at different levels of analysis.
2. The relation between the performance of network infrastructures and its technical
and institutional coordination.
3. On the normative assessment of different technological and institutional coordination
arrangements, which will contribute to discussions of the social acceptance and
acceptability of the changes in network infrastructures.

Network infrastructures are large socio-technical systems that provide essential services to
society. These services include energy, communication, transportation, drinking water and
sanitation systems. This requires technical and institutional coordination. For instance,
travelling by train between two cities requires both types of coordination, facilitated by
different devices, for example a time table allocating geographical and temporal slots to
different rail transport services and a signaling and rail routing systems that is technically
coordinated to assure that safe and punctual transport is possible.

Network infrastructures are no longer characterized by technologically inseperable large-

scale technologies organized as natural monopolies. ICT has contributed to a fundamental
technical and institutional restructuring of these systems, opening a broad range of new
applications and services thanks to ‘smart’ technologies. Such innovations contribute to a
modularization of the provision and use of infrastructure services. The so-called ‘unbundling’
of the operating of networks from the actual provision of services is illustrative. Unbundling
allows for competition between different service providers, while grids remain regulated
monopolies, safeguarding a level playing field.

Framework that identifies different levels of interrelations between technical features of

network infrastructures and corresponding rules and rights (Menard)

- system control: networks need to be operated according to a certain system

requirements. For instance, in rail transport minimum distances between trains are
required to meet safety standards.
- Capacity management
- Interconnection: networks need interconnection to improve their technical functioning.
- Interoperability: different parts of technical systems need to be designed so as to
meet the technical requirements of network infrastructures.
→ the concept of criticality is important: besides allowing the identification of institutional and
technological arrangements that are essential to securing these functions, it also suggests
that this coordination operates at three different levels:
1. Global embeddedness: constitutive technical and institutional features applicable to a
broad group of network infrastructures.
2. Sector governance: contextual parameters defining the specific network.
3. Technical operations and organizational arrangements

Week 6
Multiple-Case Analysis on Governance Mechanisms of Multi-Sided Platforms
The concept of multi-sided platforms (MSP) plays an important role in the environment of
companies with internet-based business models. In the recent years new platforms emerged
and disrupted long-established companies. Examples are Uber and Airbnb, challenging the
taxi and accommodation industry.

MSP generates value by connecting two or more different parties who want to exchange
products, services or information. The basis of an MSP is the platform itself which
orchestrates the interactions between the different sides. Platform governance is an
important mechanism to manage the way of communication between the different parties.
This paper: What are governance mechanisms for multi-sided platforms and which trade offs
have to be considered when designing governance mechanisms?

1. Governance structure: contains decisions rights and the ownership of the company.
A platform governance can for example be structured centrally or diffused.
Furthermore, it is important how the authority and responsibilities are organized. Is it
all centered with the platform owner or is one side of the platform empowered over
another?
2. Resources & Documentation: platform transparency and usage of platform boundary
resources. Platform boundary resources such as API’s were identified as an
important factor for cultivating a platform ecosystem.
3. Accessibility & Control: output control and monitoring.
4. Trust & perceived risk: nature of the platform ecosystem to enhance trust.
5. Pricing: clarifies which party is setting the price, who decides on participating on the
platform, who is paying and which side profits.
6. External relationships: the platform supports the mechanism of interoperability
between different systems

Important findings are, that a decentralized governance (no restrictions in terms of

accessibility or a low input control) may lead to a more rapid user growth and could therefore
be used in the early mature states, where a centralized governance (having restrictions and
limited accessibility offers a high level of platform control in exchange for a reduced user
involvement and transparency on governance processes.

Platforms, Systems competition and innovation: Reassessing the foundations of

communications policy
Focusing on the effects of policy on investment and innovation this paper examines whether
the conceptual foundations of sector regulation are aligned with the current technological
and economic conditions for advanced communications. This article explores the
implications of the changed economic and technological conditions of information and
communication industries for communications policy. Particularly the plasticity and
generativity of digital production technologies raise interesting new challenges.

Whereas government policy is implemented in formal and often hierarchical procedures,

internet governance relies on a mix of formal and non-formal multi-stakeholder settings with
participants, rules of engagement, and powers of enforcement that are different from and
sometimes orthogonal to traditional government regulation.

Three developments changed the use of Internet based services:

1. evolution of communication networks from specialized infrastructures to general
purpose platforms capable of supporting a broad range of application and ervices.
2. Increased connectivity at increasing speeds in combination with more powerful fixed
and mobile devices.
3. advances in computing power and the adoption of modular system architectures.
→ these developments have greatly increased the plasticity and generativity of digital
production technology. Plasticity allows the production of digital services and applications
with multiple factor combinations are often radically different costs.
→ these changes have greatly altered and will further influence investment and innovation in
the ICT sector.

Changes that have unfolded in the past decades have altered the economic characteristics
of the ICT system, often in conflicting directions. Modular digital technology has expanded
the space for innovation opportunities, as continuous experiments can contribute to steady
improvements of products and services. Many modular innovations can be carried out with
modest resources by small and medium-sized firms.
Innovations require coordination of a complicated value network and high investment upfront
have also grown in importance.

Week 7
Transaction Cost Economics: How it works: where it is headed.

The new institutional Economics comes in two parts. 1. Deals with the institutional
environment. 2. deals with the institution of governance.
Transaction cost economics is an (1) interdisciplinary joiner of law, economics, and
organization in which economics is the first, (2) is a comparative institutional exercise in
which economizing is the main case and the action resides in the details of transactions and
governance, (3) generates numerous refutable implications in relation to which the data are
broadly corroborative, and (4) has many public policy ramifications. Much of transaction cost
economics can be digested by orthodoxy, and this has been happening.

Transaction cost economics operates at Level 3. Taking the rules of the game at Level 2 as
shift parameters, Level 3 deals with the play of the game. Alterna-tive modes of organization
are described as syndromes of attributes that differ indiscrete structural ways. Second-order
economizing applies: get the governance structures – markets, hybrids, firms, bureaus –
right. The period over which such decisions come up for consideration is of the order of a
year to a decade.