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An Economic Response to “Why Inefficient Institutions Always Exist?” from the Micro-Perspective


  • Dai, Darong


As is well‐known,“foot‐binding”,regarded as an inefficient institution owing to its great harm to the women’s body and mind, existed and lasted for a very long period in the history of China. Furthermore, we are faced with the general question: why so many inefficient institutions in reality exist and persist? And this investigation is motivated to provide us with an economic explanation from micro‐perspective. Based upon some necessary assumptions and the definition of meta‐institution, it is argued in a simple mathematical model that equilibrium solution will always be inefficient institution even though the institutions themselves will experience various changes.

Suggested Citation

  • Dai, Darong, 2012. "An Economic Response to “Why Inefficient Institutions Always Exist?” from the Micro-Perspective," MPRA Paper 41606, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41606

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    Meta-institution; Social net-welfare; Economic equilibrium;

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary

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