 Law Enforcement and TransitionGérard Roland and Thierry Verdier DELTA Working Papers from DELTA (Ecole normale supérieure) Abstract: We present a simple model to analyze law enforcement problems in transition economies. Law enforcement implies coordination problems and multiplicity of equilibria due to a law abidance and a fiscal externality. We analyze two institutional mechanisms for solving the coordination problem. A first mechanism, which we call "dualism", follows the scenario of Chinese transition where the government keeps direct control over economic resources and where a liberalized non state sector follows market rules. The second mechanism we put forward is accession to the European Union. We show that accession to the European Union, (even without external borrowing) provides a mechanism to eliminate the "bad" equilibrium, provided the "accessing" country is small enough relative to the European Union. Interestingly, we show that accession without conditionality is better than with conditionality because conditionality creates a coordination problem of its own that partly annihilates the positive effects of expected accession. Keywords: MODELS; MARKET; LAW (search for similar items in EconPapers) Published in European Economic Review, 2003, 47, pp. 669-685. There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:del:abcdef:2000-25 Access Statistics for this paper More papers in DELTA Working Papers from DELTA (Ecole normale supérieure) Contact information at EDIRC. |
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