Are Oligarchs Productive? Theory and Evidence
University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
April 24, 2006
This paper develops a partial equilibrium model to account for stylized facts about the behavior of oligarchs, politically and economically strong conglomerates in transition and developing countries. The model predicts that oligarchs are more likely than other owners to invest in productivity enhancing projects and to vertically integrate firms to capture the gains from possible synergies and, thus, oligarchs can be socially beneficial. Using a unique dataset comprising almost 2,000 Ukrainian open joint stock companies, the paper tests empirical implications of the model. In contrast to commonly held views, econometric results suggest that, after controlling for endogeneity of ownership, oligarchs tend to improve the performance of the firms they own relative to other firms.
Number of Pages in PDF File: 49
Keywords: Oligarch, transition, firm performance, property rights, treatment effect
JEL Classification: C21, C25, D24, O17, P26, P31working papers series
Date posted: November 4, 2004
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