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A theory of institutional legitimacy

Author

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  • Enrico Colombatto

Abstract

Institutions matter: they affect individual action, influence cooperation and are crucial in making the difference between wealth and poverty, growth and stagnation. Yet, the explanatory power of modern institutional economics has not been exceedingly satisfactory. This paper criticizes the mainstream institutional view and maintains that its key weakness consists in its consequentialist nature. In contrast with the traditional perspective, therefore, we suggest a theory of institutional dynamics based on the notions of justice, social and procedural legitimacy and fairness. In particular, we put forward a stylized model of society, which includes two groups of individuals: the socialists and the libertarians. We discuss under which conditions they are likely to cooperate, when instability emerges and when demand for institutional change builds up. Finally, we draw on these insights in order to articulate a new research agenda for institutional economics.

Suggested Citation

  • Enrico Colombatto, 2012. "A theory of institutional legitimacy," ICER Working Papers 05-2012, ICER - International Centre for Economic Research.
    • Handle: RePEc:icr:wpicer:05-2012
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    File URL: http://www.biblioecon.unito.it/biblioservizi/RePEc/icr/wp2012/ICERwp05-12.pdf
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    References listed on IDEAS

    as
    1. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    2. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    3. Berggren, Niclas, 2003. "The Benefits of Economic Freedom: A Survey," Ratio Working Papers 4, The Ratio Institute.
    4. Luis Angeles, 2011. "Institutions, Property Rights, and Economic Development in Historical Perspective," Kyklos, Wiley Blackwell, vol. 64(2), pages 157-177, May.
    5. Andreas Bergh & Christian Bjørnskov, 2011. "Historical Trust Levels Predict the Current Size of the Welfare State," Kyklos, Wiley Blackwell, vol. 64(1), pages 1-19, February.
    6. Berggren, Niclas & Bergh, Andreas & Bjørnskov, Christian, 2012. "The growth effects of institutional instability," Journal of Institutional Economics, Cambridge University Press, vol. 8(2), pages 187-224, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Legitimacy; fairness; justice; institutions; cooperation;
    All these keywords.

    JEL classification:

    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • Z1 - Other Special Topics - - Cultural Economics

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