Differentials in property Rights in a two-sector economy
This paper presents a two-sector economy. In a contested sector two agents struggle to appropriate the maximum possible fraction of a contestable output. In an uncontested sector, they hold secure property rights over the production of some goods. Agents split their resource endowment between “butter”, “guns” and “ice-cream”. The latter denote productive activities secure from appropriation. It is shown how improvements in productivity can countervail destructive impact of continuous conflicts. Eventually, the basic model is extended to consider a government and a rival group. A redistributive government can boost production in the uncontested sector, but at a higher level of “guns”.
Volume (Year): 122 (2012)
Issue (Month): 2 ()
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