text: Printed from https://ideas.repec.org/p/abo/neswpt/w0116.html
  () (New Economic School (NES), Center for Economic and Financial Research (CEFIR), Center for Economic Policy Research (CEPR))
  In an economy with weak economic and political institutions, the major institutional choices are made strategically by oligarchs and dictators. The conventional wisdom presumes that as rent-seeking is harmful for oligarchs themselves, institutions such as enforcement of the property rights will emerge eventually. We explicitly model a dynamic game between oligarchs and a dictator, who can contain rent-seeking. The oligarchs choose either a weak dictator (who can be overthrown by an individual oligarch) or a strong dictator (who can only be replaced via a consensus of oligarchs). In equilibrium, no dictator can commit to both: (i) protecting the oligarchs?property rights from the other oligarchs and (ii) not expropriating oligarchs himself. We show that a weak dictator does not limit rent-seeking. A strong dictator does reduce rent-seeking but also expropriates individual oligarchs. We show that even though eliminating rent-seeking is Pareto optimal, weak dictators do get appointed in equilibrium and rent-seeking continues. This outcome is especially likely when economic environment is highly volatile.
  Sergei Guriev & Konstantin Sonin, 2007. "Dictators and Oligarchs: A Dynamic Theory of Contested Property Rights," Working Papers w0116, New Economic School (NES).
  Handle: RePEc:abo:neswpt:w0116
  File URL: https://www.nes.ru/files/Preprints-resh/WP116.pdf
  Daron Acemoglu & James A. Robinson, 2013. "Ekonomia kontra polityka: niebezpieczne rady w kwestiach polityki ekonomicznej," Gospodarka Narodowa, Warsaw School of Economics, issue 11-12, pages 113-136.
  Daniel Leonard & Ngo Van Long, 2012. "Endogenous Changes in Property Rights Regime," The Economic Record, The Economic Society of Australia, vol. 88(280), pages 79-88, March.
  Aram Grigoryan & Mattias Polborn, 2018. "Insecure Property Rights and the Missing Middle," CESifo Working Paper Series 7203, CESifo Group Munich.
  Michael Rochlitz, 2016. "Political Loyalty Vs Economic Performance: Evidence from Machine Politics in Russia'S Regions," HSE Working papers WP BRP 34/PS/2016, National Research University Higher School of Economics.
  Aköz, Kemal Kivanç & Barber IV, Benjamin & Jensen, Jeffrey & Zenker, Christina, 2018. "Revisiting the democracy-private investment nexus: Does inequality matter?," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1215-1233.
  All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:abo:neswpt:w0116. See general information about how to correct material in RePEc.