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)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lutz-Alexander Busch & Ignatius J. Horstmann, 1997.
"The Game of Negotiations: Ordering Issues and Implementing Agreements,"
97003, University of Waterloo, Department of Economics, revised May 1997.
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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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