Political Economy in a Changing World
AbstractWe provide a general framework for the analysis of the dynamics of institutional change (e.g., democratization, extension of political rights or repression of different groups), and how these dynamics interact with (anticipated and unanticipated) changes in the distribution of political power and in economic structure. We focus on the Markov Voting Equilibria, which require that economic and political changes should take place if there exists a subset of players with the power to implement such changes and who will obtain higher expected discounted utility by doing so. Assuming that economic and political institutions as well as individual types can be ordered, and preferences and the distribution of political power satisfy natural “single crossing” (increasing differences) conditions, we prove the existence of a pure-strategy equilibrium, provide conditions for its uniqueness, and present a number of comparative static results that apply at this level of generality. We then use this framework to study the dynamics of political rights and repression in the presence of radical groups that can stochastically grab power. We characterize the conditions under which the presence of radicals leads to repression (of less radical groups), show a type of path dependence in politics resulting from radicals coming to power, and identify a novel strategic complementarity in repression.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19158.
Date of creation: Jun 2013
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Other versions of this item:
- Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2013. "Political Economy in a Changing World," Levine's Working Paper Archive 786969000000000803, David K. Levine.
- Konstantin Sonin & Georgy Egorov & Daron Acemoglu, 2013. "Political Economy in a Changing World," 2013 Meeting Papers 386, Society for Economic Dynamics.
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-24 (All new papers)
- NEP-CDM-2013-06-24 (Collective Decision-Making)
- NEP-MIC-2013-06-24 (Microeconomics)
- NEP-POL-2013-06-24 (Positive Political Economics)
- NEP-UPT-2013-06-24 (Utility Models & Prospect Theory)
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