Independent rent extraction by competing public officials produces a level of bribery that is too high both from the viewpoint of corrupt administrations and from the viewpoint of social welfare. Nevertheless, governments in many developing countries do not curb the harmful lack of coordination...

I analyze the postelectoral coalition formation process in a two-dimensional political environment. The two dimensions are the degree of a proportional tax rate and the degree of a group-specific public good. Parties are office-motivated and care instrumentally about policy. I analyze when...

Although institutions rooted in the folk theorem can support self-enforcing exchange in a wide variety of contexts, their potential to create cooperation is not limitless. In particular, the folk theorem may break down when some agents are physically stronger than others. I demonstrate this in...

Frey [2001] and others propose subjecting governments to competition within their jurisdiction, but classical liberals argue that having competing law enforcers cannot work. This article describes a hybrid system that relies on markets but has one law enforcement agency per region, with profit...

This paper extends the analysis of the structure of judicial hierarchies to environments in which litigants may have asymmetric information about the merits of the case. We identify equilibria in which the error rate is zero. In each equilibrium, at least one of the inferior courts does not...

Contemporary economic liberalism comes in two forms: a substantive version, which defines the scope and extent of economic policy, and a procedural version, which draws on citizens' preferences. Whereas the recent reconception of economic liberalism based on social-contract theory considers the...

It has been argued in the literature that limiting the profits of hospitals can be an effective method of maintaining the quality of medical care. The present paper examines this hypothesis using a simple formal model of the health-care market under asymmetric information. It is shown that, in...

Traditional insurance theory assumes that the parties involved assign subjective probabilities of losses. Here, we demonstrate that mutually beneficial risk-sharing is possible without the assignment of a probability - it is enough that the sharing parties presume that they are faced with the...

This paper develops a model of pricing and dividend policies in open credit cooperatives (i.e., those doing member and nonmember business). For a fixed distribution of member preferences, the larger the fraction of business done by members, the smaller the optimal dividend and the larger the...

This paper provides an efficiency-based explanation for several features of university governance including academic tenure. In this model, tenure is part of a broader system of organizational governance where the non-profit status of the university requires faculty members to evaluate and...