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The Dynamics of Property Rights in Modern Autocracies

Author

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  • Dan Cao
  • Roger Lagunoff

Abstract

We study a dynamic model of property appropriation in autocracies. To maintain the appearance of the rule of law, an autocrat reassigns property only when the reassignment is acceptable to all affected citizens. Nevertheless, the autocrat can appropriate public and private property by exploiting enforcement gaps. After an adjustment period, wealth shares of public property and the private property of out-groups decline. The model rationalizes the connection between wealth inequality and privatization in many autocracies. Calibrating to Russian and Chinese data, simulations to mid-twenty-first century display widening wealth gaps between elites and the populace. Anocracies mitigate this outcome.

Suggested Citation

  • Dan Cao & Roger Lagunoff, 2023. "The Dynamics of Property Rights in Modern Autocracies," American Economic Journal: Microeconomics, American Economic Association, vol. 15(3), pages 305-353, August.
    • Handle: RePEc:aea:aejmic:v:15:y:2023:i:3:p:305-53
    DOI: 10.1257/mic.20210229
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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