Insecure Property Rights and Growth: The Roles of Appropriation Costs, Wealth Effects, and Heterogeneity
AbstractWe extend the model of insecure property rights by Tornell and Velasco (1992) and Tornell and Lane (1999) by adding three features: (i) extracting the common property asset involves a private appropriation cost, (ii) agents derive utility from wealth as well as from consumption, and (iii) agents can be heterogeneous. We show that both an increase in the appropriation cost and, when appropriation costs vary across agents, an increase in the degree of heterogeneity of these costs reduce the growth rate of the public capital stock. We also show that, in the interior equilibrium, the private asset can have either a lower or a higher money rate of return than the common property asset.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1253.
Date of creation: 2004
Date of revision:
corruption; property rights; growth; appropriation cost;
Other versions of this item:
- Ngo Long & Gerhard Sorger, 2006. "Insecure property rights and growth: the role of appropriation costs, wealth effects, and heterogeneity," Economic Theory, Springer, vol. 28(3), pages 513-529, 08.
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- Jayasri Dutta & Colin Rowat, 2006.
"The Road to Extinction: commons with capital markets,"
04-11r, Department of Economics, University of Birmingham.
- Jayasri Dutta & Colin Rowat, 2007. "The Road to Extinction: Commons with Capital Markets," Discussion Papers 04-11RR, Department of Economics, University of Birmingham.
- Jayasri Dutta & Colin Rowat, 2007. "The Road to Extinction: Commons with Capital Markets," WEF Working Papers 0024, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
- Jayasri Dutta & Colin Rowat, 2004. "The Road to Extinction: Commons with Capital Markets," GE, Growth, Math methods 0412001, EconWPA.
- Colin Rowat & Jayasri Dutta, 2004. "The road to extinction: commons with capital markets," Econometric Society 2004 North American Summer Meetings 145, Econometric Society.
- Holger Strulik & Ines Lindner, 1999.
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19909, Hamburg University, Department of Economics.
- Ines Lindner & Holger Strulik, 2004. "Why not Africa? -- Growth and Welfare Effects of Secure Property Rights," Public Choice, Springer, vol. 120(1_2), pages 143-167, 07.
- Gaudet, G. & Moreaux, M. & Salant, S.W., 1997.
"Private Storage of Common Property,"
97-08, Michigan - Center for Research on Economic & Social Theory.
- Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
- Gerhard Sorger, 2005. "A dynamic common property resource problem with amenity value and extraction costs," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(1), pages 3-19.
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