Ill-Defined Institutions and the Production of Inefficacity: A Case Study of Unexpected Perverse Effects Causation in Haitian Traffic Regulation Rules

It is well documented that institutions can produce effectiveness by reducing uncertainty, transaction costs, and allow good anticipations, among other effects. Other researches show that not all institutions matter. In this article, based on a case study in Haitian traffic regulation, we show that ill-defined institutions produce incredible inefficacity, particularly unexpected perverse effect. We study a specific institution of the Haitian traffic law and demonstrate that the institution according to which entrant driver has priority in a traffic circle produce a lot of bottlenecks in Haiti. Our results can be use by the Department of Ground Transportation (DGT) to better challenge problems of traffic jams in the country, particularly in the metropolitan area where there are more traffic circles and much traffic density. We argue that institutional change is necessary since DGT is unable to provide sufficient traffic roads to relieve traffic congestion in the capital. The basic idea is that it is easier for DGT to manage ground transportation institutionally than technically.