Institutional design balances the costs and benefits of dictatorship and disorder. Democracy can be efficient if it improves the performance of government. Yet, sometimes authoritarian governments can be efficient if they reduce disorder. We show that democratization has a nonlinear effect on...

The central question in modern regulatory states is how to balance the sword of public enforcement with the setting of incentives for firms to comply with the law - broadly, to pursue the public good - just because it is in their interest to do so. We assess the ability of the state to encourage...