June 20, 2016 | Posted by Sandy Hager
Why do institutions grow? Despite nearly a century of scientific effort, there remains little consensus on this topic. This paper offers a new approach that focuses on energy consumption. A systematic relation exists between institution size and energy consumption per capita: as energy consumption increases, institutions become larger. I hypothesize that this relation results from the interplay between technological complexity and human biological limitations. I also show how a simple stochastic model can be used to link energy consumption with firm dynamics.
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