Working Paper No. 155

The Formation of Incentive Mechanisms in Different Economic Systems

When studying incentives in different economic systems, traditional comparative economics focuses on comparing incentives within markets to incentives within hierarchies. Advantages of the former are treated as advantages of private enterprise, and advantages of the latter as advantages of socialist planning or government control. This approach has two weaknesses which prevents it from reaching any conc1usive results. First, no universally valid answer can be given to the question of which of the two types of incentives lead to a socially more efficient behavior. Second, the markets vs. hierarchies issue are not directly relevant to the comparison of real economic systems, for most of them contain mixtures of both types of organization and incentives.

The present paper proposes an organizationally dynamic approach which is free of these weaknesses. This approach shifts the focus from the way in which given types of organization function to the processes through which organizations form and reform. Different economic systems are then evaluated according to their capacity to channel such processes towards the formation of efficient organizational structures with efficient mixtures of incentives. The main conc1usion of the paper then is that a certain type of private enterprise is superior to government control and all forms of socialism in terms of such a capacity.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.


Seminars organized by IFN


To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

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