Institutional Trap

Do, Quy-Toan

World Bank, Washington, D.C.

关键词: INSTITUTIONS;    INEQUALITY;    ENDOGENOUS;    COALITIONS;    PERSISTENCE;   

DOI  :  10.1596/1813-9450-3291
RP-ID  :  WPS3291

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The author studies the persistence ofinequality and inefficient governance in a physical capitalaccumulation model with perfect information, missing creditmarkets, and endogenous barriers to entry. When access toinvestment opportunities is regulated, rent-seekingentrepreneurs form coalitions of potentially varying size tobribe a regulator to restrict entry. Small coalitions runshort of resources, while large coalitions suffer moresevere free-rider problems. The distribution of wealth thusdetermines the equilibrium coalition structure of theeconomy and consequently the level of regulatory capture. Adynamic analysis supports the persistence of inefficienciesin the long run. Initial conditions determine whether theeconomy converges to a steady state characterized byefficient governance and low levels of inequality, or a pathtoward an institutional trap where regulatory capture andwealth inequality reinforce each other.