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Inefficient predation, information, and contagious institutional change

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  • Dorsch, Michael
  • Maarek, Paul

Abstract

This paper presents an agency theory of revolutionary political transitions from autocracy to democracy. We model authoritarian economic policy as the equilibrium outcome of a repeated game between an elite ruling class and a disenfranchised working class, in which workers have imperfect information about the elite's policy choice and the economy's productive capacity. We characterize the conditions under which, in equilibrium, (i) the elite will set inefficient economic institutions under the threat of revolution, (ii) information shocks can catalyze democratic revolutions that may be contagious among similar countries, and (iii) democracy can be consolidated following a political transition.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38759.

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Date of creation: Apr 2012
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Handle: RePEc:pra:mprapa:38759

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Keywords: Political transition; Revolution; Asymmetric information; Contagion; Democratic consolidation; Arab Spring;

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  1. Daron Acemoglu, 2010. "Institutions, Factor Prices, and Taxation: Virtues of Strong States?," American Economic Review, American Economic Association, vol. 100(2), pages 115-19, May.
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  7. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
  8. Timothy Besley & Torsten Persson, 2007. "The Origins of State Capacity: Property Rights, Taxation, and Politics," NBER Working Papers 13028, National Bureau of Economic Research, Inc.
  9. Lohmann, Susanne, 1994. "Information Aggregation through Costly Political Action," American Economic Review, American Economic Association, vol. 84(3), pages 518-30, June.
  10. Rodrik, Dani, 1998. "Democracies Pay Higher Wages," CEPR Discussion Papers 1776, C.E.P.R. Discussion Papers.
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  13. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
  14. Timur Kuran, 1989. "Sparks and prairie fires: A theory of unanticipated political revolution," Public Choice, Springer, vol. 61(1), pages 41-74, April.
  15. repec:cup:cbooks:9780521855266 is not listed on IDEAS
  16. Daron Acemoglu, 2007. "Oligarchic Versus Democratic Societies," Carlo Alberto Notebooks 47, Collegio Carlo Alberto.
  17. Chassang, Sylvain & Miquel, Gerard Padró i, 2009. "Economic Shocks and Civil War," International Quarterly Journal of Political Science, now publishers, vol. 4(3), pages 211-228, October.
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Cited by:
  1. Paul Maarek & Michael Dorsch & Karl Dunz, 2012. "Macro Shocks, Regulatory Quality and Costly Political Action," THEMA Working Papers 2012-41, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  2. Dorsch, Michael & Dunz, Karl & Maarek, Paul, 2012. "Asymmetric Information and Inefficient Regulation of Firms Under the Threat of Revolution," MPRA Paper 38879, University Library of Munich, Germany.

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