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Enforcement of Property Rights during the Russian Transition: Problems and Some Approaches to a New Liberal Solution

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  • Braguinsky, Serguey

Abstract

The paper examines economic inefficiency stemming from the replacement of the public property rights enforcement mechanism by private ("mafia-type") enforcement in the transitional economy of Russia. It is shown that private enforcement leads to the entrenchment of small-scale inefficient monopolies. The state becomes a vehicle for rent seeking and free loading. A simple model is employed to argue that a naive laissez-faire approach to the problem is not likely to work. The paper then argues that any attempt at a once-and-for-all institutional solution relying on coordination by a benevolent government is also basically impossible. A step-by-step incentive-based approach is advocated; in particular, the paper proposes the nonconventional libertarian idea of establishing a commercialized government property protection service, and it discusses some of its theoretical and practical aspects. The role of the devolution and competition of power is also examined. Copyright 1999 by the University of Chicago.

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  • Braguinsky, Serguey, 1999. "Enforcement of Property Rights during the Russian Transition: Problems and Some Approaches to a New Liberal Solution," The Journal of Legal Studies, University of Chicago Press, vol. 28(2), pages 515-544, June.
  • Handle: RePEc:ucp:jlstud:v:28:y:1999:i:2:p:515-44
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    File URL: http://dx.doi.org/10.1086/468060
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Kathryn E. Spier, 1994. "Pretrial Bargaining and the Design of Fee-Shifting Rules," RAND Journal of Economics, The RAND Corporation, pages 197-214.
    3. Chung, Tai-Yeong, 1996. "Settlement of Litigation under Rule 68: An Economic Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 25(1), pages 261-286, January.
    4. Jennifer F. Reinganum & Louise L. Wilde, 1986. "Settlement, Litigation, and the Allocation of Litigation Costs," RAND Journal of Economics, The RAND Corporation, pages 557-566.
    5. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, pages 404-415.
    6. Anderson, David A, 1994. "Improving Settlement Devices: Rule 68 and Beyond," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 225-246, January.
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    Citations

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    Cited by:

    1. Catherine Hafer & Ethan Bueno de Mesquita, 2005. "Commitment Problems and the Political Economy of States and Mafias," 2005 Meeting Papers 812, Society for Economic Dynamics.
    2. Laura Taylor & Mary Wrenn, 2003. "Forging new relationships: Social capital in the transistion," Forum for Social Economics, Springer;The Association for Social Economics, pages 1-11.
    3. Braguinsky, Serguey & Mityakov, Sergey, 2015. "Foreign corporations and the culture of transparency: Evidence from Russian administrative data," Journal of Financial Economics, Elsevier, vol. 117(1), pages 139-164.
    4. Jongwook Kim & Joseph T. Mahoney, 2005. "Property rights theory, transaction costs theory, and agency theory: an organizational economics approach to strategic management," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 223-242.
    5. Laura Taylor & Mary Wrenn, 2003. "Forging new relationships: Social capital in the transistion," Forum for Social Economics, Springer;The Association for Social Economics, pages 1-11.
    6. Jongwook Kim & Joseph T. Mahoney, 2002. "Resource-based and property rights perspectives on value creation: the case of oil field unitization," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(4-5), pages 225-245.
    7. Frijters, Paul & Shields, Michael A. & Theodoropoulos, Nikolaos & Wheatley Price, Stephen, 2003. "Testing for Employee Discrimination Using Matched Employer-Employee Data: Theory and Evidence," IZA Discussion Papers 807, Institute for the Study of Labor (IZA).
    8. Paul Frijters & Dirk Bezemer & Uwe Dulleck, 2003. "Socialism, Capitalism, and Transition - Coordination of Economic Relations and Output Performance," Paul Frijters Discussion Papers 2003, School of Economics and Finance, Queensland University of Technology.
    9. Ethan Bueno De Mesquita & Catherine Hafer, 2008. "Public Protection Or Private Extortion?," Economics and Politics, Wiley Blackwell, vol. 20(1), pages 1-32, March.
    10. Roger Myerson & Serguey Braguinsky, 2005. "Oligarchic Property Rights and Investment," 2005 Meeting Papers 49, Society for Economic Dynamics.
    11. Fafchamps, Marcel & Minten, Bart, 2001. "Property Rights in a Flea Market Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 49(2), pages 229-67, January.

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