In the developing world, kidnapping is relatively common, and a market for kidnap insurance has arisen in response. We provide a model that allows us to analyze how kidnap insurance affects the interaction between the kidnapper and the victim’s family when both are self-interested and have complete knowledge.
James Buchanan argued that the role of the political economist is to “stress the technical economic principles that one must understand in order to assess alternative arrangements for promoting peaceful cooperation and productive specialization among free men.” Although Buchanan is never mentioned in Mass Flourishing, Edmund Phelps, a Nobel laureate in economics, embraces this role of the political economist in analyzing the positive and normative implications of modern economic growth that began in the West during the early nineteenth century.
Mired in the imaginary world of long run equilibrium, mainstream neoclassical economics is oblivious to the obstacles that stand in the way of successful social cooperation. Its arid mathematical models, engaged in an in-depth analysis of a world where the economic problem has already been successfully resolved, simply assume away the problems that any economy faces in achieving an optimal coordination of means and ends.
The Genesis and Ethos of the Market asserts that virtue is not inconsistent with economic liberty. This raises the question about the relationship between virtue and economic liberty addressed in the “Civil Economy” tradition of the Neapolitan Enlightenment.
Even notable free market scholars in the 20th Century lamented the inescapable decline in intimate social relations that would emerge from the wide-scale adoption of an extended market order. This paper challenges this view that markets erode social relations by challenging the concept that the usage of money or barter are the logical distinction between the intimate and extended order, and then by offering the framework of exit, voice, and loyalty as an improved distinction between the intimate and extended order.
Many states have certificate-of-need regulations, which prohibit hospitals, nursing homes, and ambulatory surgical centers from entering new markets or making changes to the existing capacity of medical facilities without first gaining approval from certificate-of-need regulators.
We argue that the future of Austrian political economy rests on the study of how institutional entrepreneurs discover and implement alternative institutional arrangements conducive to economic growth. This requires a dual level of analysis in spontaneous order studies.
The financial crisis of 2008 has prompted some economists to call for government regulators to expand their reach—by trying to minimize financial disruptions and “systemic risks” that might harm the broader economy. Their arguments, however, ignore two fundamental challenges for prudent regulation: the knowledge problem and the incentive problem.
Can bottom-up relief efforts lead to recovery after disasters? Conventional wisdom and contemporary public policy suggest that major crises require centralized authority to provide disaster relief goods.
Mercatus PhD Fellow Vipin Veetil, along with Akshaya Vijayalakshmi and Srikanth Viswanathan, address Amartya Sen's criticism of cash-transfer programs such as education vouchers in the Wall Street Journal.
When most people think of prison gangs, they think of chaotic bands of violent, racist thugs. Few people think of gangs as sophisticated organizations (often with elaborate written constitutions) that regulate the prison black market, adjudicate conflicts, and strategically balance the competing demands of inmates, gang members, and correctional officers.