This paper studies competitive equilibria in economics characterized by the presence of asymmetric information (both of the moral hazard and the adverse selection type). We consider economies where non-exclusive contracts (securities) with payoffs dependent on the agents' private information are...

This paper analyzes how political institutions, wealth distribution and economic activities affect each other during the process of development. A simple general equilibrium model of rent-seeking political elites with two productive sectors (modern and traditional) is presented.

We consider an economy where property rights are necessary to ensure sufficient rewards to ex ante investments. Because enforcement of property rights influences the ex post distribution of rents there is room for corruption. We characterize the optimal organization of society and the optimal...