Towards a Political Theory of the Firm

Luigi Zingales

No 23593, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Neoclassical theory assumes that firms have no power of fiat any different from ordinary market contracting, thus a fortiori no power to influence the rules of the game. In the real world, firms have such power. I argue that the more firms have market power, the more they have both the ability and the need to gain political power. Thus, market concentration can easily lead to a “Medici vicious circle,” where money is used to get political power and political power is used to make money.

JEL-codes: G3 (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-his, nep-hme, nep-hpe, nep-pke and nep-pol
Note: CF
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Citations: View citations in EconPapers (17)

Published as Luigi Zingales, 2017. "Towards a Political Theory of the Firm," Journal of Economic Perspectives, vol 31(3), pages 113-130.

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Journal Article: Towards a Political Theory of the Firm (2017)
Working Paper: Towards a Political Theory of the Firm (2017)
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