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Neutral Markets, Non-neutral Institutions and Economic Evolution

Author

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  • Maslov, Alexander
  • Volchik, Vyacheslav

Abstract

The article argues the neutral nature of markets. It describes the ways neutral markets expand or fold under the influence of non-neutral institutions. A demarcation is lined up between efficacy of a market process and a market result. The paper shows inconsistency of existing neoclassic models in their objective to depict equilibrium parameters. The evolutionary nature of economies compels economists to concentrate on process efficacy which might also conduce to selection of suboptimal institutions. The latter may become extremely robust and evolve into stable populations if an existing institutional framework contributes to the expansion of exchanges. These issues are analyzed through the prism of "bottle-neck" and "founder" effects. The comparative inefficiency of economic evolution claims for effectiveness of a process but not the general system.

Suggested Citation

  • Maslov, Alexander & Volchik, Vyacheslav, 2010. "Neutral Markets, Non-neutral Institutions and Economic Evolution," MPRA Paper 42692, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:42692
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    File URL: https://mpra.ub.uni-muenchen.de/42692/1/MPRA_paper_42692.pdf
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    References listed on IDEAS

    as
    1. Mokyr, Joel, 1990. "Punctuated Equilibria and Technological Progress," American Economic Review, American Economic Association, vol. 80(2), pages 350-354, May.
    2. Mokyr, Joel, 1992. "Technological Inertia in Economic History," The Journal of Economic History, Cambridge University Press, vol. 52(02), pages 325-338, June.
    3. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-1171, September.
    4. Polterovich, Victor, 2007. "Institutional Trap," MPRA Paper 20595, University Library of Munich, Germany.
    5. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    6. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    7. Dosi, Giovanni, 1997. "Opportunities, Incentives and the Collective Patterns of Technological Change," Economic Journal, Royal Economic Society, vol. 107(444), pages 1530-1547, September.
    8. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-337, May.
    9. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    10. Greif, Avner, 1992. "Institutions and International Trade: Lessons from the Commercial Revolution," American Economic Review, American Economic Association, vol. 82(2), pages 128-133, May.
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    Citations

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    Cited by:

    1. Volchik Vyacheslav, 2011. "Facilities of original institutional economics in research of institutional changes," Journal of Economic Regulation Journal of Economic Regulation (Вопросы регулирования экономики), CyberLeninka;Общество с ограниченной ответственностью «Гуманитарные перспективы», vol. 2(4), pages 24-38.
    2. Frolov, Daniil & Lavrentyeva, Anna, 2014. "Metaphors and Analogies in Institutional Economic Theory," MPRA Paper 55011, University Library of Munich, Germany.

    More about this item

    Keywords

    market efficacy; congenital development; institutional transformation; bottle-neck effect; founder's effect;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian

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