MILOEK
Militärökonomische Forschung und Lehre
Research and Courses in Economics of Defense
E
Online: * August 2012
A Unifying Perspective V
The next page offers a systematization of these coordination issues by merging security economics, public economics and the new institutional economics under the label of a Kantian-Rawlsian approach to economics (macrostructure).
The corresponding mesostructure is represented by a transaction pyramid focusing on the individual levels of information each stakeholder possesses about the transaction constellation. This level of information is based on the stakeholder’s own activities as well as on the others’ activities concerning the supply of the transaction object, the object’s transfer, its potential uses over its lifetime and, finally, its decommission / scrapping.
This mesostructure is supplemented by a microstructure that analyzes each relevant activity according to an activity chain encompassing the following steps a) identifying a goal, b) analyzing the environment, the means and the conditions required to achieve the goal, c) deciding about the “strategy” to realize the goal, d) the preparation phase, e) the realization phase and, finally, f) the evaluation phase.
Based on this structure, the specific source of a coordination challenge can be identified. In turn, tailored solutions for the corresponding transaction constellation become possible. These solutions stem from a spectrum of coordination mechanisms. Some major classes of this spectrum deserve to be pointed out:
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The market ─ able to overcome coordination issues because competitive forces push for the introduction of design features like signaling or screening,
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Hybrid designs like franchise contracts (a compromise between scale economies in production & reputation on one side and local information relevant to the success of the business operation on the other side),
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Corporative solutions where, ex. g., internal recruiting works because credible reputation can be established or investment into further education pays off because of the higher barriers to leave.
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Semi-governmental solutions like foundations offer the possibility to the citizen to signal a particular interest in the social
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Governmental interventions like regulations for private activities or enforcing contracts between private actors,
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The full-fledged substitution of private activities by the state due to market failure ─ in particular, the provision of public goods or services, the guarantee of individual existence and of market competency based on the subsidiary principle.
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First Version: October 2012
This Version: November 2012