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In less productive economies, however, such institutions are not established, and partnership contracts are not formed. In economies with intermediate productivity levels, multiple <jats:styled-content style=\"fixed-case\">N</jats:styled-content>ash equilibria exist; that is, contract enforcement institutions are established in the high <jats:styled-content style=\"fixed-case\">N</jats:styled-content>ash equilibrium whereas they are not formed in the low <jats:styled-content style=\"fixed-case\">N</jats:styled-content>ash equilibrium. In this case, institutional quality can be diverse across economies. We also prove that improvement in institutional quality reduces within‐country inequality. All these outcomes are consistent with cross‐country observations.</jats:p>"}]}],"creator":[{"@id":"https://cir.nii.ac.jp/crid/1380004235453467270","@type":"Researcher","foaf:name":[{"@value":"Takuma Kunieda"}],"jpcoar:affiliationName":[{"@value":"City University of Hong Kong"}]},{"@id":"https://cir.nii.ac.jp/crid/1420564276188694144","@type":"Researcher","personIdentifier":[{"@type":"KAKEN_RESEARCHERS","@value":"70633064"},{"@type":"NRID","@value":"1000070633064"},{"@type":"NRID","@value":"9000342462032"},{"@type":"RESEARCHMAP","@value":"https://researchmap.jp/keisukeokada"}],"foaf:name":[{"@value":"Keisuke Okada"}],"jpcoar:affiliationName":[{"@value":"Kansai 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