Power and Inefficient Institutions
This 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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- 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.
- Busch, Lutz-Alexander & Horstmann, Ignatius J., 2002. "The game of negotiations: ordering issues and implementing agreements," Games and Economic Behavior, Elsevier, vol. 41(2), pages 169-191, November.
- 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.
- Ignatius J. Horstmann & Kimberley A. Scharf, 2000. "The Game of Negotiations: Ordering Issues and Implementing Agreements," UWO Department of Economics Working Papers 200011, University of Western Ontario, Department of Economics.
- 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.
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