Institutional trap, Vol. 1 of 1

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Home > Data & Research > Research > Author Profile > Report Details

Institutional trap

Author:	Quy-Toan Do;	Collection Title:	Policy, Research working paper ; no. WPS 3291
Country:	World;	Date Stored:	2004/05/10
Document Date:	2004/04/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	The World Region
Report Number:	WPS3291	SubTopics:	Information Technology; Gender and Health; Roads & Highways; Health Monitoring & Evaluation; Early Child and Children's Health
Volume No:	1 of 1

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.


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File Type		Description	File Size (mb)

	PDF 35 pages	Official version*	2.45 (approx.)
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File Type		Description	File Size (mb)

	PDF 35 pages	WPS3291	0.32

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