Abstract

http://ssrn.com/abstract=2327412
 
 

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Political Economy of Redistribution


Daniel Diermeier


Northwestern University - Kellogg School of Management

Georgy Egorov


Northwestern University - Kellogg School of Management; NBER

Konstantin Sonin


University of Chicago - Irving B. Harris Graduate School of Public Policy Studies; Higher School of Economics; Centre for Economic Policy Research (CEPR)

May 11, 2016


Abstract:     
It is often argued that additional constraints on redistribution such as granting veto power to more players in the society makes property better protected from expropriation. We use a legislative bargaining-type model to demonstrate that this intuition may be ‡flawed. Increasing the number of veto players or raising the supermajority requirement for redistribution may reduce protection on the equilibrium path. The reason is the existence of two distinct mechanisms of property rights protection. One is formal constraints that allow individuals or groups to block any redistribution that is not in their favor. The other occurs in equilibrium where players without such powers protect each other from redistribution. Players without formal veto power anticipate that the expropriation of other similar players will ultimately hurt them and thus combine their infl‡uence to prevent redistributions. In a stable allocation, the society exhibits a “class”structure with class members having equal wealth, and strategically protecting each other from redistribution.

Number of Pages in PDF File: 41

Keywords: political economy, legislative bargaining, property rights, institutions

JEL Classification: D71, D74, C71


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Date posted: September 18, 2013 ; Last revised: May 12, 2016

Suggested Citation

Diermeier, Daniel and Egorov, Georgy and Sonin, Konstantin, Political Economy of Redistribution (May 11, 2016). Available at SSRN: http://ssrn.com/abstract=2327412 or http://dx.doi.org/10.2139/ssrn.2327412

Contact Information

Daniel Diermeier
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
Georgy Egorov
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
NBER ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Konstantin Sonin (Contact Author)
University of Chicago - Irving B. Harris Graduate School of Public Policy Studies ( email )
1155 East 60th Street
Chicago, IL 60637
United States
Higher School of Economics ( email )
20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Feedback to SSRN


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