The Creation of the Rule of Law and the Legitimacy of Property Rights: The Political and Economic Consequences of a Corrupt Privatization
AbstractHow does the lack of legitimacy of property rights affect the dynamics of the creation of the rule of law? We investigate the demand for the rule of law in post-Communist economies after privatization under the assumption that theft is possible, that those who have "stolen" assets cannot be fully protected under a change in the legal regime towards rule of law, and that the number of agents with control rights over assets is large. We show that a demand for broadly beneficial legal reform may not emerge because the expectation of weak legal institutions increases the expected relative return to stripping assets, and strippers may gain from a weak and corrupt state. The outcome can be inefficient even from the narrow perspective of the asset-strippers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11772.
Date of creation: Nov 2005
Date of revision:
Note: EFG PE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Hoff, Karla & Stiglitz, Joseph E., 2005. "The creation of the rule of law and the legitimacy of property rights : the political and economic consequences of a corrupt privatization," Policy Research Working Paper Series 3779, The World Bank.
- K0 - Law and Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-19 (All new papers)
- NEP-LAW-2005-11-19 (Law & Economics)
- NEP-POL-2005-11-19 (Positive Political Economics)
- NEP-REG-2005-11-19 (Regulation)
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.:
- Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March.
- Jean-Jacques Laffont & David Martimort, 1999.
"Separation of Regulators Against Collusive Behavior,"
RAND Journal of Economics,
The RAND Corporation, vol. 30(2), pages 232-262, Summer.
- Laffont, Jean-Jacques & Martimort, David, 1994. "Separation of Regulators against Collusive Behavior," IDEI Working Papers 44, Institut d'Économie Industrielle (IDEI), Toulouse.
- John Haltiwanger, 1987.
"Responders Versus Nonresponders: A New Perspective on Heterogeneity,"
UCLA Economics Working Papers
436, UCLA Department of Economics.
- Haltiwanger, John & Waldman, Michael, 1991. "Responders versus Non-responders: A New Perspective on Heterogeneity," Economic Journal, Royal Economic Society, vol. 101(408), pages 1085-1102, September.
- Karla Hoff & Joseph E. Stiglitz, 2002.
"After the Big Bang? Obstacles to the Emergence of the Rule of Law in Post-Communist Societies,"
NBER Working Papers
9282, National Bureau of Economic Research, Inc.
- Karla Hoff & Joseph E. Stiglitz, 2004. "After the Big Bang? Obstacles to the Emergence of the Rule of Law in Post-Communist Societies," American Economic Review, American Economic Association, vol. 94(3), pages 753-763, June.
- Karla Hoff & Joseph E. Stiglitz, 2002. "After the Big Bang? Obstacles to the emergence of the rule of law in post-communist societies," Discussion Papers 0203-03, Columbia University, Department of Economics.
- Hoff, Karla & Stiglitz, Joseph E., 2002. "After the Big Bang? Obstacles to the emergence of the rule of law in post-communist societies," Policy Research Working Paper Series 2934, The World Bank.
- Roland, Gerard & Verdier, Thierry, 2003.
"Law enforcement and transition,"
European Economic Review,
Elsevier, vol. 47(4), pages 669-685, August.
- Roland, Gérard & Verdier, Thierry, 2000. "Law Enforcement and Transition," CEPR Discussion Papers 2501, C.E.P.R. Discussion Papers.
- Roland, G. & Verdier, T., 2000. "Law Enforcement and Transition," DELTA Working Papers 2000-25, DELTA (Ecole normale supérieure).
- Gerard Roland & Thierry Verdier, 1999. "Law Enforcement and Transition," William Davidson Institute Working Papers Series 262, William Davidson Institute at the University of Michigan.
- Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
- Kolodko, Grzegorz W., 2000. "From Shock to Therapy: The Political Economy of Postsocialist Transformation," OUP Catalogue, Oxford University Press, number 9780198297437, Octomber.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, vol. 83(2), pages 409-14, May.
- Dyck, Alexander & Zingales, Luigi, 2002.
"The Corporate Governance Role of the Media,"
CEPR Discussion Papers
3630, C.E.P.R. Discussion Papers.
- Daron Acemoglu, 1993.
"Reward Structures and the Allocation of Talent,"
CEP Discussion Papers
dp0143, Centre for Economic Performance, LSE.
- Kaufmann, Daniel & Wei, Shang-Jin, 1999.
"Does 'Grease Money' Speed Up the Wheels of Commerce?,"
8209, University Library of Munich, Germany.
- Kaufman, Daniel & Shang-Jin Wei, 1999. "Does"grease money"speed up the wheels of commerce?," Policy Research Working Paper Series 2254, The World Bank.
- Daniel Kaufmann & Shang-Jin Wei, 2000. "Does 'Grease Money' Speed Up the Wheels of Commerce?," IMF Working Papers 00/64, International Monetary Fund.
- Daniel Kaufmann & Shang-Jin Wei, 1999. "Does "Grease Money" Speed Up the Wheels of Commerce?," NBER Working Papers 7093, National Bureau of Economic Research, Inc.
- Raynouard, Arnaud & Kerhuel, Anne-Julie, 2011. "Measuring the law: Sécurité juridique as a watermark," Economics Papers from University Paris Dauphine 123456789/11683, Paris Dauphine University.
- Davis, Junior, 2006. "Learning from local economic development experiences: Observations on Integrated Development Programmes of the Free State, Republic of South Africa," MPRA Paper 26045, University Library of Munich, Germany.
- Stefano Porcelli, 2009. "Civilian Tradition and the Chinese Company Law," Transition Studies Review, Springer, vol. 16(2), pages 438-449, June.
- R. L. Bruno, 2008.
"Rule of Law, Institutional Quality and Information,"
634, Dipartimento Scienze Economiche, Universita' di Bologna.
- Bruno, Randolph Luca, 2008. "Rule of Law, Institutional Quality and Information," IZA Discussion Papers 3497, Institute for the Study of Labor (IZA).
- David Martimort & Stephane Straub, 2006. "Privatization and Changes in Corruption Patterns: The Roots of Public Discontent," ESE Discussion Papers 147, Edinburgh School of Economics, University of Edinburgh.
- Enrico Colombatto, 2007. "It was the rule of law. Will it be the rule of judges?," ICER Working Papers 41-2007, ICER - International Centre for Economic Research.
- Martimort, David & Straub, Stéphane, 2009. "Infrastructure privatization and changes in corruption patterns: The roots of public discontent," Journal of Development Economics, Elsevier, vol. 90(1), pages 69-84, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.