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Bureaucracy Norms and Market Size

Author

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  • Koziashvili, Arkadi
  • Nitzan, Shmuel

    (Department of Economics, Bar Ilan University, Ramat Gan, Israel)

  • Tobol, Yossef

Abstract

This paper proposes a new model of market structure determination. It demonstrates that market structure need not be the result of ideology, political power, collusion among producers or the nature of the technology. In our setting, it is determined by bureaucrats who maximize their share of the industry profits. The approach is illustrated by studying the relationship between industry size and the existing institutional norm and by identifying the bureaucrats' most preferred norm. In the latter context, we establish the fundamental inverse relationship between the costs of interaction with government officials and industry size.

Suggested Citation

  • Koziashvili, Arkadi & Nitzan, Shmuel & Tobol, Yossef, 2010. "Bureaucracy Norms and Market Size," Economics Series 259, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:259
    as

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    File URL: https://irihs.ihs.ac.at/id/eprint/2024
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Institutional norms; bureaucracy costs; norm viability; industry size;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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