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Politicians, Firms and the State of Institutional Environment
Davide Infante,Janna Smirnova 서울대학교 경제연구소 2010 Seoul journal of economics Vol.23 No.3
The model we develop analyses how the state of an institutional environment influences resources allocation in a transition economy. We capture the interaction between politicians who influence firms' decisions regarding resources allocation and managers, introducing a parameter which measures the strength of institutions. The results of our model confirm that building up strong institutions in a transition economy can play a central role in privatisation and restructuring processes and motivate agents to agree on a better resources allocation.