ECON 313 Lecture Notes - Lecture 25: Gie, Nipple, Vertical Integration

• School: McGill University
• Department: Economics
• Course: ECON 313
• Professor: Matthieu Chemin

Document Summary

After e* is exerted, landlord can renegotiate to set f(e*)-e*-rent=0. Solution 5: pluralism: go(cid:448)e(cid:396)(cid:374)(cid:373)e(cid:374)t (cid:272)a(cid:396)es a(cid:271)out people (cid:449)ith a fa(cid:272)to(cid:396) , u(cid:894)go(cid:448)(cid:895)=re(cid:374)ts+ . n. u(cid:396)plu(cid:396) p(cid:396)odu(cid:272)e(cid:396, u(cid:894)go(cid:448)(cid:895)=n. (cid:894) (cid:895)f(cid:894)e(cid:895) + . n. In the extreme case where the government cares equally about rents and people. In the case, u(gov)= n. [f(e)-e: ma(cid:454)i(cid:373)izi(cid:374)g this (cid:449)ill gi(cid:448)e e*, (cid:449)hi(cid:272)h (cid:272)o(cid:396)(cid:396)espo(cid:374)ds to =(cid:1004) O(cid:374)(cid:272)e e* is i(cid:374)(cid:448)ested, go(cid:448) (cid:272)a(cid:374) lea(cid:448)e =(cid:1004) si(cid:374)(cid:272)e it (cid:271)e(cid:374)efits f(cid:396)o(cid:373) the people. Conclusion: security of property rights matter. If i(cid:374)(cid:272)(cid:396)eases, (cid:449)o(cid:396)ke(cid:396)s (cid:449)o(cid:396)k less, e(cid:374)t(cid:396)ep(cid:396)e(cid:374)eu(cid:396)s i(cid:374)(cid:448)est less. Empirical evidence: operation braga: expropriation differs from taxation and sharecropping. Auto(cid:272)(cid:396)at te(cid:373)pted to set =(cid:1005: solutions: Institutions that promote growth have 2 main functions: restrain powerful actors, especially predatory governments, facilitate cooperation between private actors, gains from trade. Key institution: accessible, unbiased, speedy judiciary that enforces the rule of law: protects the property rights of foreign and domestic investors, enforces contracts between private parties. Theoretical impact of judiciary: exchange, property right.