Different Institutional Behavior in Different Economic Systems: Theory and Evidence on Diverging Systems Worldwide

Posted: 30 Oct 2015

See all articles by S. I. Cohen

S. I. Cohen

Erasmus University Rotterdam (EUR) - Department of Economics; University of Dubai

Date Written: 2014

Abstract

The paper reviews and criticizes the past and current state of comparative studies of economic systems (CSES) for the lack of an analytical framework to back them. An analytical framework is formulated that allows for a changing distribution and interaction of agents along the subsystems, each of which is characterized by distinct and intrinsic institutional rules. The framework studies the convergence of agents and institutions toward the dominant subsystem and behavioral type. The focus is on three subsystems – household, firm and state settings – and the intrinsic behavioral types that are associated with these, namely social sharing, profit maximization, and rent acquisition, respectively. A fourth prototype is proposed.

In this paper, we deduce and support the positioning of country groups along the prototype systems by empirical evidence and compare these with CSES literature on the varieties of capitalism. We also address the question as to why and how different paths emerged for alternative systems, their comparative economic performances, and their future global outlooks in the context of projected displacements of current leading countries by newcomer leading countries which possess different economic systems and different behavioral profiles.

Keywords: NIE, Economic systems, State, Firms

JEL Classification: 23, 25, 28

Suggested Citation

Cohen, Solomon I., Different Institutional Behavior in Different Economic Systems: Theory and Evidence on Diverging Systems Worldwide (2014). Economic Systems, Vol. 38, No. 2, 2014, Available at SSRN: https://ssrn.com/abstract=2682470

Solomon I. Cohen (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

P.O. Box 1738
Rotterdam, 3000 DR
Netherlands

University of Dubai ( email )

AL MAKTOOM STREET
Dubai, 14143
United Arab Emirates

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