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Abstract
The theory of induced innovation says that technological innovations which
economize on relatively scarce inputs will be invented and adopted. Hayami and Ruttan have
hypothesized that this model also holds for institutional innovations. Williamson suggests
that economic organization, such as vertical integration, is the result of transaction cost
minimization. Coase discusses the transaction costs of negotiation versus the court system to
solve externality problems.
These various threads of the literature are brought to bear on the issue of innovations
over time in relation to the National Native Title Tribunal. Mining companies have
developed guidelines for negotiation with Aboriginal claimants. In Western Australia,
regional agreements have been created which have the potential to greatly reduce
transaction costs compared to negotiations between individual claimants and other agents
such as mining companies. In addition to the reductions in transaction costs from a
negotiated settlement rather than litigation, there are other advantages of negotiation,
whether bilateral or regional. These include improved “quality” of settlements, improved
relations between the negotiating parties, and more timely resolution.