Elgar original reference
Edited by William F. Shughart II and Laura Razzolini
Chapter 25: The public choice approach to economic history
Robert B. Ekelund, Jr and Audrey B. Davidson 1 Introduction History is the supreme laboratory for economists and other social scientists. Public choice theory, viewed especially as interest-group theory undergirded by rent-seeking activities, has much to add to historical analysis. However, historical–institutional analysis includes many other features of modern economic theory. This chapter therefore has two interrelated purposes. First, we seek to establish some of the links between public choice and a broader theory of institutional change. A simpliﬁed modern theory of institutional change premised on rational choice assumptions and neoclassical theorizing will be tentatively sketched. The discussion relates public choice principles to property rights assignments, transaction costs and economizing behavior to analyse the forces that shape institutions over time. In other words, the issues raised by public choice and interest groups are inextricably bound up with a richer theory of institutional change and it is a misconception to argue that public choice is somehow divorced from modern neoclassical theory. In order to approach an examination of the contributions of public choice to historical research, in other words, at least the suggestion or hint of how a theory of institutional change might be devised is necessary. Such a theory must contain elements relevant to market efﬁciency as well as to interest-group dynamics. It also should be noted that while many modern economists dealing with institutions seek explanations that impose some kind of order on history, they do so at greater or lesser distances from the assumptions of...
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