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Institutional Theory of Endless Redistribution
https://doi.org/10.32609/0042-8736-2005-7-4-18
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 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 protection of 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 the 1990s, who controlled large stakes of newly privatized property, provide motivation for this paper.
About the Author
K. Sonin
New Economic School; Centre for Economic and Financial Research; Institute for Advanced Study
Russian Federation
Russian Federation
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For citations:
Sonin K. Institutional Theory of Endless Redistribution. Voprosy Ekonomiki. 2005;(7):4-18. (In Russ.) https://doi.org/10.32609/0042-8736-2005-7-4-18
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