ECON 313 Lecture Notes - Lecture 7: Creative Destruction, Sharecropping, Operation Barga
30 Nov 2017
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^^ it was only mentioned on page 285 barons, etc) ^^ we can see once again the link between political and economic institutions. The novel idea now has been to put institutions at the heart of the economic theory. (tau) = expropriation rate by a powerful actor (government, landlord, bandits, feudal. An economic agent keeps (cid:883) because is taken out of you. Does not have much an impact so act as if =(cid:882) Surplus = benefit - cost = f(e) - e. Looking at this, it is not a good thing to work that long because cost caches up. You want the difference between f(e) and c(e) to be the biggest. You ar elooking for e* (the equilibrium) When the derivative is equal to 0 f(e) - e derivative is f"(e) - 1. Ask people if they will work less if is high. But the elites will say that they are secure.
