Political Economy of Economic Institutional Change - Contemporary Chinese Economic Theory Innovation Library

Author: Wanglixin
Publisher:
Publish Date: 2006-04-01
Features: The economic system is determined by the equilibrium of institutional bargaining among relevant stakeholders. The institutional bargaining payoff structure that determines the outcome of the equilibrium depends on: the current state of productive forces and the political power structure, where the political power structure is largely determined by the state of productive forces. All the links that determine the institutional bargaining equilibrium can change due to the effects of exogenous factors, ultimately leading to changes in the institutional bargaining equilibrium and corresponding institutional change. Major fundamental economic institutional changes often require large-scale collective action by interest groups to drive them, and ideology is the main mechanism to overcome the free-rider problem in this process. Based on the above theoretical framework, this book provides preliminary explanations for the three major historical economic institutional changes: the transition from a feudal coercive economy to a free-market economy, the transition from an immature market economy to a planned economy, and the transition from a planned economy to a market economy. These explanations aim to identify the key exogenous variables that drive these three institutional changes and determine the path of change. To this end, the book extensively uses game theory as an analytical tool while also attempting to draw on the ideas of nonlinear system dynamics to open up analytical perspectives. This book is suitable for economic theorists, faculty and students of economics and management majors in various universities and colleges.