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Proceedings of the German Development Economics Conference, 2011 (Berlin) >
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http://hdl.handle.net/10419/48350
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| Title: | | Markets and Jungles  |
| Authors: | | Gall, Thomas Masella, Paolo |
| Issue Date: | | 2011 |
| Series/Report no.: | | Proceedings of the German Development Economics Conference, Berlin 2011 30 |
| Abstract: | | Economic institutions determine prospects for growth and development. This paper examines necessary conditions for an economy to support institutions that implement markets. Agents differ in land holdings, skill, and power. A competitive market assigns land to the skilled, not necessarily to the powerful. Therefore a market allocation needs to be robust to coalitional expropriation. In a dynamic setting, market payoffs may induce sufficient inequality in next period's endowments for markets to alternate with expropriation in a limit cycle, decreasing efficiency and amplifying macroeconomic fluctuations. Long run stability of markets is favored by higher social mobility, more initial equality, and less mismatch between demand and supply. |
| Subjects: | | Expropriation market institutions inequality fluctuations coalition formation |
| JEL: | | E02 O43 C71 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Proceedings of the German Development Economics Conference, 2011 (Berlin)
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