Costs and Challenges of Polycentric Governance : An Equilibrium Concept and Examples from U.S. Health Care

The inherent complexity of polycentric systems of governance brings both benefits and costs. Institutional diversity facilitates collective action by diverse groups within a community, but at the cost of losing any clear sense of the responsibilities and accountability of public officials. Such systems are built up piece by piece over long periods of time, making it difficult to use analytical tools of political economy based on equilibrium concepts. This paper introduces an Score equilibrium concept, based on the minimal costs of transactions (S, for subsidiarity costs) involved in the establishment of new formal organizations or informal mechanisms for collective action by specific groups. After surveying the factors affecting the relative costs and benefits of expanding existing arenas for collective action, this paper concludes with a brief overview of collaborative structures found in the U.S. healthcare system. This is definitely a complex, polycentric system, but one which too often lacks effective mechanisms for collective action at the community level