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Institutional Trap / Do, Quy-Toan
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Đõ̂, Quý Toàn.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Agents.
- Bargaining.
- Consensus.
- Corruption.
- Entry.
- GDP.
- Gi.
- Index.
- Institutional Change.
- Iru.
- Licensing.
- Ms.
- Nature.
- Production.
- Roads and Highways.
- Supply.
- Transport.
- Vd.
- Vdu.
- Wealth.
- Wealth Constraints.
- Zdv.
- Local Subjects:
- Agents.
- Bargaining.
- Consensus.
- Corruption.
- Entry.
- GDP.
- Gi.
- Index.
- Institutional Change.
- Iru.
- Licensing.
- Ms.
- Nature.
- Production.
- Roads and Highways.
- Supply.
- Transport.
- Vd.
- Vdu.
- Wealth.
- Wealth Constraints.
- Zdv.
- Physical Description:
- 1 online resource (35 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2004
- System Details:
- data file
- Summary:
- The author studies the persistence of inequality and inefficient governance in a physical capital accumulation model with perfect information, missing credit markets, and endogenous barriers to entry. When access to investment opportunities is regulated, rent-seeking entrepreneurs form coalitions of potentially varying size to bribe a regulator to restrict entry. Small coalitions run short of resources, while large coalitions suffer more severe free-rider problems. The distribution of wealth thus determines the equilibrium coalition structure of the economy and consequently the level of regulatory capture. A dynamic analysis supports the persistence of inefficiencies in the long run. Initial conditions determine whether the economy converges to a steady state characterized by efficient governance and low levels of inequality, or a path toward an institutional trap where regulatory capture and wealth inequality reinforce each other. This paper-a product of the Poverty Team, Development Research Group-is part of a larger effort in the group to understand the determinants of institutions.
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