Governments that levy predatory regulation and provide few weak legal institutions draw businesses into the unofficial economy and compel them to hire private protection organizations. Based on a survey of shopkeepers in three cities in Russia, we find that retail shops face very high levels of predatory regulation and have frequent contacts with private protection rackets. In addition, we show that higher levels of regulation are associated with weaker legal institutions and a higher probability of contact with a private protection organization. We also find that shopkeepers view private protection organizations primarily as a substitute for state-provided police protection and state-provided courts. These results emphasize the importance of public sector reform as a component of economic transition.
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Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number
w0002.
Length: 40 pages Date of creation: Jan 2000 Date of revision: Handle: RePEc:cfr:cefirw:w0002
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[Downloadable!]
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Simeon Djankov & Edward Miguel & Yingyi Qian & Gerard Roland & Ekaterina Zhuravskaya, 2004.
"Entrepreneurship: First Results from Russia,"
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Haaparanta, Pertti & Juurikkala, Tuuli & Lazareva, Olga & Pirttilä, Jukka & Solanko, Laura & Zhuravskaya, Ekaterina, 2003.
"Firms and public service provision in Russia,"
BOFIT Discussion Papers
16/2003, Bank of Finland, Institute for Economies in Transition.
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Pertti Haaparanta & Tuuli Juurikkala & Olga Lazareva & Jukka Pirttila & Laura Solanko & Ekaterina Zhuravskaya, 2003.
"Firms And Public Service Provision In Russia,"
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Simeon Djankov & Edward Miguel & Yingyi Qian & Gerard Roland & Ekaterina Zhuravskaya, 2005.
"Who are Russia’s entrepreneurs?,"
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w0048, Center for Economic and Financial Research (CEFIR).
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Evgeny Yakovlev & Ekaterina Zhuravskaya, 2007.
"Deregulation of Business,"
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w0097, Center for Economic and Financial Research (CEFIR).
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Simeon Djankov & Yingyi Qian & Gerard Roland & Ekaterina Zhuravskaya, 2005.
"Who Are China’s Entrepreneurs?,"
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