Abstract

http://ssrn.com/abstract=2327412
 


 



Endogenous Property Rights


Daniel Diermeier


Northwestern University - Kellogg School of Management

Georgy Egorov


Northwestern University - Kellogg School of Management; NBER

Konstantin Sonin


Higher School of Economics; Centre for Economic Policy Research (CEPR)

December 2013


Abstract:     
It is often argued that additional checks and balances provide economic agents with better protection from expropriation of their wealth or productive capital. We demonstrate that in a dynamic political economy model this intuition may be ‡awed. Surprisingly, increasing the number of veto players or the majority requirement for redistribution may reduce property right protection on the equilibrium path. The reason is the existence of two distinct mechanisms of property rights protection. One are formal constraints that allow individuals or groups to block any redistribution which is not in their favor. The other occurs in equilibrium where agents without such powers protect each other from redistribution. Players without formal blocking power anticipate that the expropriation of other similar players will ultimately hurt them and thus combine their in‡uence to prevent redistributions. Yet, such incentives can be undermined by adding formal constraints. The ‡ip-side of this e¤ect is that individual investment e¤orts might require coordination. The model also predicts that the distribution of wealth in societies with weaker formal institutions (smaller supermajority requirements) among players without veto power will tend to be more homogenous.

Number of Pages in PDF File: 35

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

JEL Classification: D71, D74, C71

working papers series


Download This Paper

Date posted: September 18, 2013 ; Last revised: July 15, 2014

Suggested Citation

Diermeier, Daniel and Egorov, Georgy and Sonin, Konstantin, Endogenous Property Rights (December 2013). 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)
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


Paper statistics
Abstract Views: 760
Downloads: 181
Download Rank: 95,597

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.860 seconds