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http://ssrn.com/abstract=983908
 
 

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Dictators and Oligarchs: A Dynamic Theory of Contested Property Rights


Sergei M. Guriev


New Economic School (NES); Sciences Po; Centre for Economic Policy Research (CEPR)

Konstantin Sonin


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

July 7, 2008

Journal of Public Economics, Vol. 93, No. 1-2, pp. 1-13, July 2008

Abstract:     
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 property rights will emerge spontaneously. We explicitly model a dynamic game between the 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.

Number of Pages in PDF File: 28

Keywords: property rights, oligarchs, non-democratic politics

JEL Classification: D72, H1, P16

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Date posted: May 3, 2007 ; Last revised: October 22, 2009

Suggested Citation

Guriev, Sergei M. and Sonin, Konstantin, Dictators and Oligarchs: A Dynamic Theory of Contested Property Rights (July 7, 2008). Journal of Public Economics, Vol. 93, No. 1-2, pp. 1-13, July 2008. Available at SSRN: http://ssrn.com/abstract=983908

Contact Information

Sergei M. Guriev (Contact Author)
New Economic School (NES) ( email )
47 Nakhimovsky Prospekt
Moscow
Russia
+7 095 129 3844 (Phone)
+7 095 129 3722 (Fax)
HOME PAGE: http://www.nes.ru/~sguriev/
Sciences Po ( email )
27 rue Saint-Guillaume
Paris Cedex 07, 75337
France
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Konstantin Sonin
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
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