Towards an Economic Theory of the Church

The theory of the firm is employed to explain behaviour of the church. Churches produce a set of products including entertainment, a variety of socially valuable public goods, eternal life and alteration of otherwise fated events. Most importantly, it reduces transactions costs by enforcing a system of property rights. Enforcement is enhanced by the promise of heaven and threat of hell, two innovations uniquely available to the church. Some implications of the model using the standard Cross‐cultural Sample of the Human Relations Area Files are tested.