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Institutional Theory of Endless Redistribution


  • K. SONIN.


In unequal societies, the rich may benefit from shaping economic institutions in their favor. This paper analyzes the dynamics of institutional subversion by focusing on public protection of property rights. If this institution functions imperfectly, agents have incentives to invest in private protection of property rights. The ability to maintain private protection systems makes the rich natural opponents of public protection of property rights and precludes grass-roots demand to drive the development of the market-friendly institution. The economy becomes stuck in a bad equilibrium with low growth rates, high inequality of income, and wide-spread rent-seeking. The Russian oligarchs of the 1990s, who controlled large stakes of newly privatized property, provide motivation for this paper.

Suggested Citation

  • K. Sonin., 2005. "Institutional Theory of Endless Redistribution," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
  • Handle: RePEc:nos:voprec:2005-07-1

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    References listed on IDEAS

    1. Commander, Simon & Liberman, Leonid & Yemtsov, Ruslan, 1993. "Wage and employment decisions in the Russian economy : an analysis of developments in 1992," Policy Research Working Paper Series 1205, The World Bank.
    2. Peter J. Luke & Mark E. Schaffer, 1999. "Wage Determination in Russia: An Econometric Investigation," CERT Discussion Papers 9908, Centre for Economic Reform and Transformation, Heriot Watt University.
    3. Shakhnovich Ruvim & Yudashkina Galina, 2001. "Wage-Setting and Employment Behavior of Enterprises during the Period of Economic Transition," EERC Working Paper Series 01-04e, EERC Research Network, Russia and CIS.
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