Political-Jurisdictional Possibilities and Transitions

Posted: 31 Jul 2016

See all articles by Trent MacDonald

Trent MacDonald

RMIT University, Faculty of Business, School of Economics, Finance and Marketing, Students

Date Written: December 15, 2015

Abstract

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

MacDonald, Trent, Political-Jurisdictional Possibilities and Transitions (December 15, 2015). Available at SSRN: https://ssrn.com/abstract=2815766

Trent MacDonald (Contact Author)

RMIT University, Faculty of Business, School of Economics, Finance and Marketing, Students ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria
Australia

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