Institutional Competition

Institutional Competition

New Thinking in Political Economy series

Edited by Andreas Bergh and Rolf Höijer

Why is competition between institutions usually viewed in a negative light, when competition is considered positive in most other economic contexts? The contributors to this volume introduce new perspectives on this issue, analytically and empirically exploring reasons for this perception.


Andreas Bergh and Rolf Höijer

Subjects: economics and finance, austrian economics, institutional economics


Andreas Bergh and Rolf Höijer In the policy debate there has been much talk about institutional competition – or the new systems competition, as some prefer to call it. It has been argued, for example, that institutional competition leads to a race to the bottom in terms of eroding government revenues, redistributing wealth from workers to capitalists, and limiting democracy by forcing politicians to please international investment capital instead of working for their voters. Negative assessments of institutional competition have thus predominated. This volume introduces new perspectives into this debate, basically by turning the argumentation on its head. Why is institutional competition regarded as something bad, when competition is regarded as good in all other economic contexts, and the absence of competition regarded as a bad thing in all other standard analyses? The volume analytically and empirically explores a number of issues surrounding this question. Some important themes that recur in different chapters in this volume consider: ● ● ● ● ● Whether institutional competition might facilitate liberty and democracy, rather than inhibit it; The extent to which competition might involve experimentation and learning that can be beneficial for society; How institutional competition may act as a corrective force to reduce inefficiencies and rent-seeking; Institutional competition can enable governments to become allocatively efficient in relation to their constituents’ preferences; Whether institutional competition really does lead to a decline in government revenues. These perspectives recur in different chapters, but the chapters also differ in many respects. Though there are some...