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

See all articles by Vyacheslav Volchik

Vyacheslav Volchik

Southern Federal University

Alexander Maslov

Carleton University

Date Written: October 29, 2010

Abstract

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

Volchik, Vyacheslav and Maslov, Alexander, Neutral Markets, Non-Neutral Institutions and Economic Evolution (October 29, 2010). Economical Herald of Donbas Quaterly. № 4 (22). 2010. pp. 26-33., Available at SSRN: https://ssrn.com/abstract=2180033

Vyacheslav Volchik (Contact Author)

Southern Federal University ( email )

105 Bolshaya Sadovaya Str.
Rostov-on-Don, 344006
Russia

Alexander Maslov

Carleton University ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

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