Template-Type: ReDIF-Paper 1.0
Author-Name: Thomas Gall 
Author-X-Name-First: Thomas
Author-X-Name-Last: Gall 
Author-Email: tgall@uni-bonn.de
Author-Workplace-Name: University of Bonn
Author-Name: Paolo Masella
Author-X-Name-First: Paolo
Author-X-Name-Last: Masella
Author-Email: pmasella@mail.uni-mannheim.de
Author-Workplace-Name: Dept. of Economics, University of Mannheim, Germany
Title: Markets and Jungles
Abstract: Institutions affect prospects for economic growth and development. In this paper a condition on the primitives determines whether an economy supports markets. Agents differ in land holdings, skill, and power. A competitive market assigns land efficiently to the skilled, not necessarily to the powerful. Therefore a market allocation needs to be stable with respect to coalitional expropriation. More equally distributed power and higher congruence of land and power favor stable markets. In a dynamic setting, we identify conditions that ascertain whether markets are stable forever, or alternate with expropriation in a limit cycle, decreasing efficiency and amplifying macroeconomic fluctuations.
Length: 38
Creation-Date: 2009-02
Revision-Date: 
Publication-Status: 
File-URL:http://www.bu.edu/econ/ied/dp/papers/dp%20187.pdf
File-Format: Application/pdf
File-Function: 
Number: dp-187
Classification-JEL: O17, D70, C71
Keywords: Expropriation, consistent set, inequality, volatility
Handle: RePEc:bos:iedwpr:dp-187