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The Institutional Economics of Identity

10 Pages Posted: 20 Nov 2017 Last revised: 21 Nov 2017

Chris Berg

RMIT University - School of Economics, Finance and Marketing

Sinclair Davidson

RMIT University - School of Economics, Finance and Marketing

Jason Potts

RMIT University

Date Written: November 16, 2017

Abstract

Identification forms a key part of all but the least sophisticated economic and political transactions. More complex or significant transactions demand more formal identification of the parties involved. In this paper we develop an institutional economics of identity. We distinguish between a Demsetzian evolutionary view of identity institutions and a ‘legal-centric’ view of identity institutions. In the former view, identity is a contextual, fluid and subjective, and evolved for market, social and political exchange. In the latter, identity is uniform and permanent, and created (imposed) by governments. Governments have an interest in identity insofar as identity is used in the process of tax collection, entitlements, and conscription. Private organisations free ride off state-provided identification services. The paper concludes with a discussion about technological change and identity management. We characterise two possible futures: one in which new technologies enable states to create more comprehensive uniform identities, and one in which new technologies enable identities to be ‘federated’ and transferred to citizens.

Keywords: identity, institutional economics, property rights

JEL Classification: D02, D23, H40

Suggested Citation

Berg, Chris and Davidson, Sinclair and Potts, Jason, The Institutional Economics of Identity (November 16, 2017). Available at SSRN: https://ssrn.com/abstract=3072823

Chris Berg (Contact Author)

RMIT University - School of Economics, Finance and Marketing ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

Sinclair Davidson

RMIT University - School of Economics, Finance and Marketing ( email )

445 Swanston Street
Melbourne, Victoria 3000
Australia
+61-3-9925-5869 (Phone)
+61-3-9925-5986 (Fax)

Jason Potts

RMIT University ( email )

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