ECON 001A Lecture Notes - Lecture 10: Varieties Of Capitalism, Incomes Policy, Industrial Policy
19 May 2020
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Document Summary
We understand policy outcome by understanding the institutional legacy. Hall and soskice, the varieties of capitalism . Actors are interest-maximizing agents; but they act within a specific institutional framework. The presence of certain institutions can raise the returns to the presence of other, complementary institutions. This explains why we see certain kinds of financial arrangements alongside certain labor market practices. Institutions reinforce each other; no institutional convergence. Idea of business, labor, banking; sometimes customers formally represented. Equilibria are the result of the strategic interactions between firms. Some institutions facilitate the sharing of information. Expectations of others determined by repeated behavior. Emphasize strategic interaction; shaped more than just formal rules. Firms find themselves in an institutional context. They did not go and create these core institutions themselves. Causes firms to respond differently to shocks. There is a special emphasis on innovation: Cme can invest in specific and co-specific assets. Boards include shareholders and employees, sometimes suppliers and customers.
