The Equivalence of Political and Economic Allocations
Cardozo Electronic Law Bulletin, Accepted Papers Series, Vol. 26(1), 2015
10 Pages Posted: 14 May 2015
Date Written: May 13, 2015
The aim of this paper is to analyse what does it happen when we introduce “violence”, threats and self-help, into economic models. This will be done considering the alternative between a market or a political allocation. The conclusions will be:
a) That under standard assumptions there is no difference between a market allocation and a political allocation; and so that there is no inner superiority in a market allocation in comparison with a political one.
b) That if we move away from these standard assumptions, then the only real economic problem becomes a “political” problem, and that there cannot be efficient conclusions which are independent from an initial allocation of force and resources.
Keywords: Law and Economics, Economic Allocation, Property Rights, Violence, Blackmail, Political, Coase, International Relations, Efficiency, Social Cost.
JEL Classification: A10, K00, K10, K40, L10
Suggested Citation: Suggested Citation