In the paper “Entry Barriers in Politics, or: Why Politics, Like Natural Monopoly, Is Not Organised as an Ongoing Market-Process,” an analytical framework for dealing with processes of political competition is presented. The idea goes back to Tullock's model of democracy as franchise-bidding for natural monopoly. To this, basic insights of New Institutional Economics and Austrian Ecomomics are added. It is shown that incomplete contracts which arise in economic bidding schemes, characterise political competition. At the same time, they create leeway for political entrepreneurship. The same is true for various barriers to entry in politics. These barriers affect a trade-off between political stability and contestability which is discussed in view of incentives and opportunities for politicians to engage in positive-sum, long-term investments in political reforms.
The Review of Austrian Economics – Springer Journals
Published: Oct 6, 2004
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