Exiting a lawless state, Vol. 1 of 1

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

Exiting a lawless state

Author:	Hoff, Karla; Stiglitz, Joseph E.;	Collection Title:	Policy Research working paper ; no. WPS 4520
Country:	World;	Date Stored:	2008/03/03
Document Date:	2008/02/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	The World Region
Report Number:	WPS4520	SubTopics:	Public Sector Corruption & Anticorruption Measures; Bankruptcy and Resolution of Financial Distress; National Governance; Labor Policies; Gender and Law
Volume No:	1 of 1

Summary: An earlier paper showed that an economy could be trapped in an equilibrium state in which the absence of the rule of law led to asset-stripping, and the prevalence of asset-stripping led to the absence of a demand for the rule of law, highlighting a coordination failure. This paper looks more carefully at the dynamics of transition from a non-rule-of-law state. The paper identifies a commitment problem as the critical feature inhibiting the transition: the inability, under a rule of law, to forgive theft. This can lead to the perpetuation of the non-rule-of-law state, even when it might seem that the alternative is Pareto-improving.


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