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TERRA ECONOMICUS

Institutional analysis of public goods production

TERRA ECONOMICUS, , Vol. 11 (no. 1.1),
p. 65-80

The problem of the public goods production, along with the issues related to the degree and conditions of treating the institutions as the formal and informal rules of behavior in the form of public goods are investigated in the article. The situation called an «investment trap» which occurs in the process of operation of both newly introduced and ongoing institutions is defined; the ways of overcoming of an «investment trap» by the means of institutional planning are described. The conditional model of connections between the public goods (or institutions) production and the price level is presented by the author. The model shows that, in simple case of linearly increasing returns, the number and the constitution of institutions, as well as their effectiveness (or level of dysfunction) are able to cause appreciable influence on price dynamics within the economic system.


Keywords: institutions; the public good; «investment trap»; dysfunction; private property right

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606