Neutral Markets, Non-Neutral Institutions and Economic Evolution
Economical Herald of Donbas Quaterly. № 4 (22). 2010. pp. 26-33.
8 Pages Posted: 23 Nov 2012
Date Written: October 29, 2010
The article argues the neutral nature of markets. It describes the ways neutral markets expand or fold under the influence of non-neutral institutions. A demarcation is lined up between efficacy of a market process and a market result. The paper shows inconsistency of existing neoclassic models in their objective to depict equilibrium parameters. The evolutionary nature of economies compels economists to concentrate on process efficacy which might also conduce to selection of suboptimal institutions. The latter may become extremely robust and evolve into stable populations if an existing institutional framework contributes to the expansion of exchanges. These issues are analyzed through the prism of "bottle-neck" and "founder" effects. The comparative inefficiency of economic evolution claims for effectiveness of a process but not the general system.
Keywords: market efficacy, congenital development, institutional transformation, bottle-neck effect, founder's effect
JEL Classification: O10, B52, O30, B53
Suggested Citation: Suggested Citation