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Institutional Free Riding

In: How Trade with China Threatens Western Institutions

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  • Robert Gmeiner

    (Methodist University)

Abstract

Certain institutions give countries comparative advantage in certain areas, such as IPRs and the development of semiconductors. If their trading partners lack these institutions, they benefit from these goods through trade. Trading partners can misappropriate the benefit of these institutions, such as IPRs, by infringing or extorting value. The benefit of good economic institutions can be nonexcludable, and the flow of this benefit is determined by country-level decisions. This chapter explains how one country can free ride on others’ economic and political institutions. It also explains why victims of free riding continue to acquiesce. Institutional free riding has contributed to more rent seeking behavior and market concentration in the West. These direct results can lead to detrimental political and institutional change.

Suggested Citation

  • Robert Gmeiner, 2021. "Institutional Free Riding," Springer Books, in: How Trade with China Threatens Western Institutions, chapter 0, pages 141-180, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-74709-1_5
    DOI: 10.1007/978-3-030-74709-1_5
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