Why the Rich May Favor Poor Protection of Property Rights

22 Pages Posted: 30 Apr 2003 Last revised: 22 Oct 2012

Konstantin Sonin

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

Date Written: December 1, 2002

Abstract

In unequal societies, the rich may benefit from shaping economic institutions in their favor. This paper analyzes the dynamics of institutional subversion by focusing on the public protection of property rights. If this institution functions imperfectly, agents have incentives to invest in private protection of property rights. The ability to maintain private protection systems makes the rich natural opponents of public property rights and precludes grass-roots demand to drive the development of the market-friendly institution. The economy becomes stuck in a bad equilibrium with low growth rates, high inequality of income, and wide-spread rent-seeking. The Russian oligarchs of 1990s, who controlled large stakes of newly privatized property, provide motivation for this paper.

Keywords: property rights, demand for institutions, oligarchs, Russia

JEL Classification: O1, P14, P26

Suggested Citation

Sonin, Konstantin, Why the Rich May Favor Poor Protection of Property Rights (December 1, 2002). Journal of Comparative Economics, Vol. 31, No. 4, pp. 715-731, 2003. Available at SSRN: https://ssrn.com/abstract=386102 or http://dx.doi.org/10.2139/ssrn.386102

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

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