Quotation of the Day…

by Don Boudreaux on February 24, 2014

in Growth, Property Rights

… is from page 1 of Nobel laureate Douglass North‘s 2005 book, Understanding the Process of Economic Change:

Because various kinds of markets (political as well as economic) have different margins at which competition can be played out, the consequence of the structure we impose will be to determine whether the competitive structure induces increasing economic efficiency or stagnation.

Competition (like cooperation) is a given.  It will occur.  The only question is how – on what ‘margins’ – and, hence, what will be the results.  A profit-seeing business that can gain that profit only by successfully competing for customers with lower prices and higher-quality products contributes to widespread economic growth.  In contrast, a profit-seeking business that can gain that profit by persuading government to bestow on it subsidies, tariffs, or other special privileges will compete less for customer approval and more for the approval of politicians.  The latter sort of competition undermines economic growth.

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