Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents

Dmitry Veselov

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We consider the problem of finding sufficient conditions for political support of liberal, growth-enhancing policy in a quality-ladders model with heterogeneous agents differing in their endowment of wealth and skills. The policy set is two-dimensional: Agents vote for the level of redistribution as well as for the level of entry barriers preventing the creation of more efficient firms. We show that under the majority voting rule there are three possible stable political outcomes: full redistribution and low barriers to entry ("liberal" order), high redistribution and high barriers to entry ("corporatism"). We show that key variables determining the political outcome are the expected gain from technological adoption, the ratio of total profits to total wages, and the skewness of human capital distribution.

Keywords: Barriers to entry; majority voting; quality-ladders model; wealth inequality; talent inequality; economic growth; Barrières d'entrées; la règle majoritaire; le modèle d'échelles de la qualité; l'inégalité de la richesse; l'inégalité du talent (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-cdm and nep-pol
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00830027
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Published in 2013

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Related works:
Working Paper: Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents (2013)
Working Paper: Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents (2013)
Working Paper: Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00830027

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