Download this Paper Open PDF in Browser

Dictators and Oligarchs: A Dynamic Theory of Contested Property Rights

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

28 Pages Posted: 3 May 2007 Last revised: 22 Oct 2009

Sergei M. Guriev

Sciences Po; Centre for Economic Policy Research (CEPR)

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: July 7, 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.

Keywords: property rights, oligarchs, non-democratic politics

JEL Classification: D72, H1, P16

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: https://ssrn.com/abstract=983908

Sergei M. Guriev (Contact Author)

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

HOME PAGE: http://econ.sciences-po.fr/staff/sergei-guriev

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Konstantin Sonin

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

Paper statistics

Downloads
907
Rank
20,128
Abstract Views
4,033