12525 - Economics of Public Institutions

Course Unit Page


This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

No poverty Decent work and economic growth Climate Action Partnerships for the goals

Academic Year 2021/2022

Learning outcomes

This module introduces the main strands of the New Institutional Economics. The general goal of the analysis is to provide students with the basic tools of the economic approach to the study of the functioning, origins and impact of formal and informal institutions. By the end of the course, the students will be able to critically evaluate the observed institutional variation and propose possible reforms.

Course contents

Inclusive Political Institutions and the Economy: Stylized Facts

This part of the course discusses the concept of social order and the crucial role of the inclusiveness of political institutions in structuring it. Furthermore, it clarifies the functional relationships among inclusiveness of political institutions, a culture of cooperation and property rights. Finally, this part of the course illustrates the empirical literature on the impact of democracy, considered as exogenous, on economic development.

Micro-Mechanisms: Political Order and Cooperation

The second part of the course, together with the third one, introduces two recent strands of research documenting that the inclusiveness of the political order is endogenous, i.e., a rational human chocie. The first of these two literatures clarifies how the expansion of the political rights encourages a cooperation between elites and nonelites made otherwise impossible by adverse production conditions.

Micro-Mechanisms: Political Order and Property Rights

The third part of the course discusses a recent strand of research clarifying the role of property rights in modulating the elites' and nonelites' incentives to cooperate and their relationship with the inclusiveness of the political process.


  • North, Douglass C., John Joseph Wallis, and Barry R. Weingast. 2009. Violence and Social Orders: A Conceptual Framework for Understanding Recorded Human History. Cambridge: Cambridge University Press.
  • Various papers:

Inclusive Political Institutions and the Economy: Stylized Facts

  • North et al. (2009), capitoli 1-4.
  • Acemoglu, Daron, Suresh Naidu, Pascual Restrepo, and James A. Robinson. 2018. "Democracy Does Cause Growth." Journal of Political Economy, 127: 47-100.
  • Guiso, Luigi, Paola Sapienza, Luigi Zingales. 2016. "Long-term Persistence." Journal of the European Economic Association, 14: 1401-1436.
  • Coase, Ronald H. 1960. "The Problem of Social Cost." Journal of Law and Economics, 3: 1-44.
  • Acemoglu, Daron, and Simon Johnson. 2004. "Unbundling Institutions.” Journal of Political Economy, 113: 949-995.
  • Besley, Timothy, and Maitreesh Ghatak. 2010. "Property Rights and Economic Development." In Handbook of Development Economics, Vol. V. Mark Rosenzweig and Dani Rodrik, eds. Amsterdam: Elsevier, 4525-4589.

Micro-Mechanisms: Political Order and Cooperation

  • North et al. (2009), capitoli 5-6.
  • Fleck, Robert K., and F. Andrew Hanssen. 2006. "The Origins of Democracy: a Model with Application to Ancient Greece." Journal of Law and Economics, 49: 115-146.
  • Boranbay, Serra, and Carmine Guerriero. 2019. "Endogenous (In)Formal Institutions." Journal of Comparative Economics, 47: 921-945.
  • Guerriero, Carmine. 2020. "Endogenous Institutions and Economic Outcomes." Economica, 87: 364-405.
  • de Oliveira, Guilherme, and Carmine Guerriero. 2018. "Extractive States: The Case of the Italian Unification." International Review of Law and Economics, 56: 142-159.

Micro-Mechanisms: Political Order and Property Rights

  • Calabresi, Guido, and Melamed, A. Douglas. 1972. "Property Rules, Liability Rules and Inalienability: One View of the Cathedral." Harvard Law Review, 85: 1089-1128.
  • Guerriero, Carmine. 2021. "Property Rights, Transaction Costs, and the Limits of the Market." https://sites.google.com/site/carmineguerrieroshomepage/home/research-1
  • Benati, Giacomo, Carmine Guerriero, and Federico Zaina. 2021. "The Rise of Inclusive Political Institutions and Stronger Property Rights: Time Inconsistency Vs. Opacity." Unpublished.
  • Benati, Giacomo, and Carmine Guerriero. 2021a. "The origins of the state: technology, cooperation and institutions." Forthcoming, Journal of Institutional Economics.
  • Benati, Giacomo, and Carmine Guerriero. 2021b. "Climate Change and State Evolution." PNAS, 118: e2020893118.

Teaching methods

Taught classes. 

Assessment methods

Final essay analyzing an insitutional reform alike those discussed in class. 

The final grade will be assigned as follows:

  • unsatisfactory <18;
  • passing grade 18-23;
  • good 24-27;
  • very good 28-30;
  • excellent "30 e lode."

Teaching tools


Links to further information


Office hours

See the website of Carmine Guerriero