Power and Inefficient Institutions
AbstractThis paper is concerned with the persistence of inefficient institutions. Why are they not replaced by more effcient ones? What and/or who prevents such change? We provide an answer to these questions based on two key ideas. The principal idea is that institutional change on an issue may adversely affect the bargaining power of some agents on different issues. The second is that certain kinds of frictions (or transaction costs) are present, which do not allow for this deteriorating bargaining power to be compensated for. A key insight obtained from our analysis is that, the greater is the degree of inequality in the players� bargaining powers the more likely it is that ineffcient institutions will persist.
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Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 561.
Date of creation: 05 Sep 2003
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-09-05 (All new papers)
- NEP-HPE-2004-09-05 (History & Philosophy of Economics)
- NEP-MIC-2003-09-14 (Microeconomics)
- NEP-POL-2004-09-05 (Positive Political Economics)
- NEP-REG-2004-09-05 (Regulation)
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- Lutz-Alexander Busch & Ignatius Horstmann, 2000.
"The Game of Negotiations: Ordering Issues and Implementing Agreements,"
Econometric Society World Congress 2000 Contributed Papers
1109, Econometric Society.
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- Lutz-Alexander Busch & Ignatius J. Horstmann, 1997. "The Game of Negotiations: Ordering Issues and Implementing Agreements," Working Papers 97003, University of Waterloo, Department of Economics, revised May 1997.
- Lutz-Alexander Busch & Ignatius J. Horstmann, 2000. "The Game of Negotiations: Ordering Issues and Implementing Agreements," UWO Department of Economics Working Papers 200010, University of Western Ontario, Department of Economics.
- Haque, Faizul & Arun, Thankom & Kirkpatrick, Colin, 2011. "The political economy of corporate governance in developing economies: The case of Bangladesh," Research in International Business and Finance, Elsevier, vol. 25(2), pages 169-182, June.
- Mukhopadhyay, Lekha, 2004. "Inequality, differential technology for resource extraction and voluntary collective action in commons," Ecological Economics, Elsevier, vol. 49(2), pages 215-230, June.
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