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The rule of law and the emergence of market exchange: A new institutional economic perspective

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  • Haucap, Justus

Abstract

Markets, where buyers and sellers can exchange goods and services, are key to the division of labor, specialisation, the realisation of economies of scale and scope and, therefore, economic prosperity, growth and development. The better markets work the easier it is to reap the benefits of specialisation and the gains from trade and voluntary exchange. For the emergence of market exchange, in turn, stable and secure property rights are key. These rights should be defined as clearly as possible and be as stable and secure as possible, in order to foster investment and to incentivize the careful and diligent treatment of assets. Hence, the rule of law and secure property rights go hand in hand with the emergence of markets, gains from trade and economic growth and prosperity.

Suggested Citation

  • Haucap, Justus, 2017. "The rule of law and the emergence of market exchange: A new institutional economic perspective," DICE Discussion Papers 276, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:276
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    Cited by:

    1. Justus Haucap, 2020. "Nobelpreis für Robert Wilson und Paul Milgrom: Zwei Ökonomen, die echte Märkte schufen [Nobel Prize for Robert Wilson and Paul Milgrom: Two Economists who Created Real Markets]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(12), pages 969-975, December.
    2. Haucap, Justus & Kehder, Christiane, 2018. "Welchen Ordnungsrahmen braucht die Sharing Economy?," DICE Ordnungspolitische Perspektiven 94, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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