Political-Jurisdictional Possibilities and Transitions
Posted: 31 Jul 2016
Date Written: December 15, 2015
This paper outlines a framework describing the tradeoff between inefficient markets, politics, and jurisdictions, and applies it to the problem of jurisdictional design. An extension of the Coase theorem is first presented describing how the relative imposition of transaction costs and wealth effects enables or prevents efficient political-jurisdictional change. We then present a possibilities frontier to describe the space of possible allocations of property rights and political authority, given the prevalence of market, political, and jurisdictional transaction costs; and a transformation frontier that shows the compact trajectory of actual allocations that obtain, given the prevalence of ideas, interests, and wealth effects. Together these furnish a more complete model of political-jurisdictional change that is used to illustrate the conditions of possible emergence or implementation of variously efficient institutional forms.
Keywords: Coase theorem, transaction costs, institutions, politics, jurisdictions, comparative systems
JEL Classification: H00, H11, P43, D00
Suggested Citation: Suggested Citation