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Information and Transaction Costs as the Determinants of Tolerable Growth Levels


  • Enrico Colombatto
  • Jonathan Macey


This paper develops a theory to explain growth in developed and undeveloped countries. Where transaction and information costs are low, people more easily perceive and oppose activities conducive to deadweight losses. The opposite holds where information and transaction costs are high, because it will be too costly for relatively weak groups to check the rent-seeking proclivities of the dominant interest groups. And, by definition, high transaction and information costs make it hard to displace incumbent leaders who produce poor growth. The levels of information and transaction costs in different countries will determine how much growth we can expect.

Suggested Citation

  • Enrico Colombatto & Jonathan Macey, 1999. "Information and Transaction Costs as the Determinants of Tolerable Growth Levels," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 617-617, December.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(199912)155:4_617:iatcat_2.0.tx_2-2

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    References listed on IDEAS

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    Cited by:

    1. Miroslav Prokopijevic, 2002. "Does growth further improve economic freedom?," ICER Working Papers 16-2002, ICER - International Centre for Economic Research.

    More about this item

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior


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