The purpose of this contribution is to probe into the issue of inefficient institutions. Towards that end, we look at the different strands that form the so-called New Institutional Economics (NIE), and raise the question for each of them as to whether institutions can be inefficient and, if yes, for what reasons. Four economic approaches are reviewed which regard and depict institutions as the outcome of individual interactions. These are the transaction-cost approach, the principal-agent approach, the equilibrium-of-the-game approach, and the evolutionary approach.
|Title of host publication||New Institutional Economics|
|Subtitle of host publication||A Guidebook|
|Place of Publication||Cambridge|
|Publisher||Cambridge University Press|
|Number of pages||20|
|Publication status||Unpublished - 2008|