Wednesday 11 August 2010

Advantages of monopoly

Olson argued that institutional sclerosis sets in over time, entrenching the rents earned by particular interests and preventing new competitors' emergence.

But that's not always a bad thing. Here's Mindhacks on the current Mexican drug war, HT: @CrimeEconomist:

I’ve just listened to NPR’s series reporting on the drug war in Mexico and I was left completely stunned by the final part which explains how the current upsurge in violence was triggered.
It turns out that it stems from a change in government, when the Institutional Revolutionary Party or the PRI were voted out after 71 years in power.
This was significant because, according to NPR, the previous government had set up a system where the cartels paid to smuggle drugs through the country but were bound to keep violence to a minimum.
When the elections changed the government, the agreements no longer held, and the cartels were essentially ‘unregulated’.

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