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Bureaucracy Norms and Market Size

  • Koziashvili, Arkadi
  • Nitzan, Shmuel

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

  • Tobol, Yossef

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.

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File URL: http://www.ihs.ac.at/publications/eco/es-259.pdf
File Function: First version, 2010
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Paper provided by Institute for Advanced Studies in its series Economics Series with number 259.

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Length: 25 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:ihs:ihsesp:259
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  1. Ignatius J. Horstmann & James R. Markusen, 1990. "Endogenous Market Structures in International Trade," NBER Working Papers 3283, National Bureau of Economic Research, Inc.
  2. Long, N.V. & Soubeyran, A. & Hillman, A., 1998. "Protection, Lobbying, and Market Structure," G.R.E.Q.A.M. 98a24, Universite Aix-Marseille III.
  3. Bliss, Christopher & Di Tella, Rafael, 1997. "Does Competition Kill Corruption?," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 1001-23, October.
  4. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-81, August.
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