by Chidem Kurdas
BP flounders, the Obama administration hastily reverses its deep-water oil drilling policy and bans what it previously wanted to expand and another regulator proves itself worse than useless. Better – or at least more realistic – decisions should be made about a valuable common resource like offshore oil. For that, we need a different institutional setup.
Elinor Ostrom, who shared the Nobel Prize in economics last year, pioneered public choice research as to what makes for well governed commons—click for a review by Alex Tabarrok of George Mason University. Professor Ostrom’s concept of bottom-up “thick rationality,” Mario Rizzo wrote in ThinkMarkets, “recognizes the importance of local knowledge and diverse approaches in the management of resources.”
Those insights are relevant for the Gulf of Mexico debacle. Continue reading