The Supply of Industry Self-Regulation
By working on the premises of the new institutional economics, this study ascribes to the idea that self-enforcing institutions are the result of strategic interaction between self-interested individuals,153.and interprets institutions as equilibrium states. Under the institutions-asequilibria approach it is argued that “institutions induce choices that are regularized because they are made in equilibrium. In equilibrium, no actor would unilaterally choose to alter his or her behavior, given the options, the payoffs, and expectations regarding choices of others; nor would that actor have reason to revise or alter his or her expectations.” 154 Thus, for an institution to be built and to prevail, it must be an equilibrium outcome, meaning that the actions necessary to establish it should be feasible and the players should have the appropriate incentives to carry out those actions. 155
KeywordsTransaction Cost Institutional Environment Individual Firm Collective Good Shared Mental Model
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