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Roving bandits in action: Outside option and governmental predation in autocracies

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  • Libman, Alexander
  • Kozlov, Vladimir
  • Schultz, André
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    Abstract

    The paper investigates the influence of outside options on the predatory behavior of autocrats. An outside option is referred to as the opportunity of an incumbent ruler to continue his career outside his current territory of control. The paper uses data on the effectiveness of tax collection and the repressiveness of tax jurisprudence for Russian regions in 2007-2009 and finds that regions ruled by governors with substantial outside options are characterized by more repressive behavior of tax authorities. However, surprisingly, the same tax authorities collect less additional revenues for the public budget. It conjectures that the presence of an outside option induces autocrats to behave like roving bandits they use tax audits to establish control over regional companies, but exploit this control to extract private rents rather than revenues for the regional budget used for public goods provision. --

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    Bibliographic Info

    Paper provided by Frankfurt School of Finance and Management in its series Frankfurt School - Working Paper Series with number 190.

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    Date of creation: 2012
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    Handle: RePEc:zbw:fsfmwp:190

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    Keywords: roving and stationary bandit; tax auditing; predatory government; Russian federalism;

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    Cited by:
    1. Böing, Philipp & Müller, Elisabeth, 2012. "Technological Capabilities of Chinese Enterprises: Who is Going to Compete Abroad?," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62081, Verein für Socialpolitik / German Economic Association.
    2. Libman, Alexander, 2013. "Natural resources and sub-national economic performance: Does sub-national democracy matter?," Energy Economics, Elsevier, Elsevier, vol. 37(C), pages 82-99.
    3. Hagemann, Harald & Kufenko, Vadim, 2014. "The political Kuznets curve for Russia: Income inequality, rent seeking regional elites and empirical determinants of protests during 2011/2012," Violette Reihe Arbeitspapiere 39/2013, Promotionsschwerpunkt "Globalisierung und Beschaeftigung".
    4. Inklaar, Robert & Koetter, Michael & Noth, Felix, 2012. "Who's afraid of big bad banks? Bank competition, SME, and industry growth," Frankfurt School - Working Paper Series 197, Frankfurt School of Finance and Management.
    5. Boeing, Philipp & Mueller, Elisabeth & Sandner, Philipp, 2012. "What makes Chinese firms productive? Learning from indigenous and foreign sources of knowledge," Frankfurt School - Working Paper Series 196, Frankfurt School of Finance and Management.

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