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Benevolent Dictators and Transaction Costs

SSRN Electronic Journal
2023
  • 0
    Citations
  • 271
    Usage
  • 0
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Usage
    271
    • Abstract Views
      217
    • Downloads
      54
  • Ratings
    • Download Rank
      762,801

Article Description

Economists and other social scientists often propose creating new institutions to improve economic welfare. However, most institutions are never adopted and remain paper dreams. In this paper, I propose a simple model of institutional change where the optimal amount of power to invest in an institution depends on the underlying distribution of power, which affects the transaction costs of building coalitions supporting a particular institution. In the model, shifts in the distribution of power affect the transaction costs of building coalitions, and ultimately the institutions themselves. An application to the international monetary system shows how the model brings together several strands of literature on institutional change in a simple framework.

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