Abstract
This paper explains one aspect of the challenges faced by regional development policy in Central and Eastern Europe. At issue is a policy for the development and expansion of small and medium sized enterprises (SMEs). The causes and dynamics of difficulties with SME development policies are analyzed in a mechanism design/game theory framework, in which “policy failure” arises as an equilibrium phenomenon. The model results deliver a cautionary note: that indiscriminate application of market criteria may be counterproductive in an environment characterized by severe constraints on material wealth accumulation.
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King, R.M. Regional business development policy in Central and Eastern Europe: a mechanism design perspective. Rev Econ Design 14, 221–242 (2010). https://doi.org/10.1007/s10058-009-0086-7
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DOI: https://doi.org/10.1007/s10058-009-0086-7
Keywords
- Mechanism design
- Small and medium sized enterprises
- Regional development policy
- Central and Eastern Europe