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The Invisible Hand Plays Dice: Eventualities in Religious Markets

  • Panu Poutvaara

    (Centre for Economic & Business Research, CESifo & IZA)

  • Andreas Wagener

    (Department of Economics, University of Vienna, CEBR & CESifo)

Religious participation is much more widespread in the United States than in Europe, while Europeans tend to view sects more suspiciously than Americans. We propose an explanation for these patterns without assuming differences in preferences or market fundamentals. Religious markets may have multiple equilibria, suggesting that observed differences in religious structures may merely be eventualities. Further, equilibria with more sects result in higher welfare and lower membership costs, as secular societies tend to host on average more demanding sects. Our main methodological contribution to the theory of religious markets is endogenizing simultaneously supply and demand of spiritual services.

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Paper provided by EconWPA in its series Others with number 0406005.

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Length: 19 pages
Date of creation: 23 Jun 2004
Date of revision:
Handle: RePEc:wpa:wuwpot:0406005
Note: Type of Document - pdf; pages: 19
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  1. Colin Rose, 1993. "Equilibrium and Adverse Selection," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 559-569, Winter.
  2. Esther Gal-Or, 1983. "Quality and Quantity Competition," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 590-600, Autumn.
  3. Laurence R. Iannaccone, 1998. "Introduction to the Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1465-1495, September.
  4. Azzi, Corry & Ehrenberg, Ronald G, 1975. "Household Allocation of Time and Church Attendance," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 27-56, February.
  5. Iannaccone, Laurence R, 1992. "Sacrifice and Stigma: Reducing Free-Riding in Cults, Communes, and Other Collectives," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 271-91, April.
  6. repec:tpr:qjecon:v:115:y:2000:i:3:p:905-953 is not listed on IDEAS
  7. Eli Berman, 1998. "Sect, Subsidy, and Sacrifice: An Economist's View of Ultra-Orthodox Jews," NBER Working Papers 6715, National Bureau of Economic Research, Inc.
  8. Pedro Pita Barros & Nuno Garoupa, 2002. "An Economic Theory Of Church Strictness," Economic Journal, Royal Economic Society, vol. 112(481), pages 559-576, July.
  9. repec:tpr:qjecon:v:84:y:1970:i:3:p:488-500 is not listed on IDEAS
  10. Eli Berman, 2003. "Hamas, Taliban and the Jewish Underground: An Economist's View of Radical Religious Militias," NBER Working Papers 10004, National Bureau of Economic Research, Inc.
  11. Wilson, Charles A, 1979. "Equilibrium and Adverse Selection," American Economic Review, American Economic Association, vol. 69(2), pages 313-17, May.
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