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Insecure Property Rights and Growth: The Roles of Appropriation Costs, Wealth Effects, and Heterogeneity

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  • Ngo Van Long
  • Gerhard Sorger

Abstract

We extend the model of insecure property rights by Tornell and Velasco (1992) and Tornell and Lane (1999) by adding three features: (i) extracting the common property asset involves a private appropriation cost, (ii) agents derive utility from wealth as well as from consumption, and (iii) agents can be heterogeneous. We show that both an increase in the appropriation cost and, when appropriation costs vary across agents, an increase in the degree of heterogeneity of these costs reduce the growth rate of the public capital stock. We also show that, in the interior equilibrium, the private asset can have either a lower or a higher money rate of return than the common property asset.

Suggested Citation

  • Ngo Van Long & Gerhard Sorger, 2004. "Insecure Property Rights and Growth: The Roles of Appropriation Costs, Wealth Effects, and Heterogeneity," CESifo Working Paper Series 1253, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1253
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    References listed on IDEAS

    as
    1. Ines Lindner & Holger Strulik, 2004. "Why not Africa? -- Growth and Welfare Effects of Secure Property Rights," Public Choice, Springer, vol. 120(1_2), pages 143-167, July.
    2. Colin Rowat & Jayasri Dutta, 2004. "The road to extinction: commons with capital markets," Econometric Society 2004 North American Summer Meetings 145, Econometric Society.
    3. Gaudet, Gerard & Moreaux, Michel & Salant, Stephen W., 2002. "Private Storage of Common Property," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 280-302, March.
    4. Gerhard Sorger, 2005. "A dynamic common property resource problem with amenity value and extraction costs," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(1), pages 3-19.
    5. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
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    Cited by:

    1. David De La Croix & Clara Delavallade, 2011. "Democracy, Rule of Law, Corruption Incentives, and Growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(2), pages 155-187, April.
    2. Mehrdad Vahabi, 2011. "The Economics of Destructive Power," Chapters,in: Handbook on the Economics of Conflict, chapter 5 Edward Elgar Publishing.
    3. Nobuhiro Mizuno & Katsuyuki Naito & Ryosuke Okazawa, 2017. "Inequality, extractive institutions, and growth in nondemocratic regimes," Public Choice, Springer, vol. 170(1), pages 115-142, January.
    4. Ines Lindner & Holger Strulik, 2008. "Social Fractionalization, Endogenous Appropriation Norms, and Economic Development," Economica, London School of Economics and Political Science, vol. 75(298), pages 244-258, May.
    5. Jayasri Dutta & Colin Rowat, 2004. "The Road to Extinction: Commons with Capital Markets," GE, Growth, Math methods 0412001, EconWPA.
    6. Dutta, Prajit K. & Radner, Roy, 2009. "A strategic analysis of global warming: Theory and some numbers," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 187-209, August.
    7. Tenryu, Yohei, 2013. "The Role of the Private Sector under Insecure Property Rights," MPRA Paper 74893, University Library of Munich, Germany, revised 27 Oct 2016.
    8. Tenryu, Yohei, 2013. "The Role of the Private Sector under Insecure Property Rights," MPRA Paper 50727, University Library of Munich, Germany.
    9. Mehrdad Vahabi, 2009. "A Critical Review of Strategic Conflict Theory and Socio-political Instability Models," Revue d'économie politique, Dalloz, vol. 119(6), pages 817-858.
    10. Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2004. "EU Merger Control in Differentiated Product Industries," CESifo Working Paper Series 1312, CESifo Group Munich.
    11. Long, Ngo Van & Wang, Shengzu, 2009. "Resource-grabbing by status-conscious agents," Journal of Development Economics, Elsevier, vol. 89(1), pages 39-50, May.
    12. Steffen Jørgensen & Georges Zaccour, 2007. "Developments in differential game theory and numerical methods: economic and management applications," Computational Management Science, Springer, vol. 4(2), pages 159-181, April.
    13. Strulik, Holger, 2008. "Voracity and Growth Reconsidered," Hannover Economic Papers (HEP) dp-401, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    14. Benchekroun, Hassan & Ray Chaudhuri, Amrita, 2014. "Transboundary pollution and clean technologies," Resource and Energy Economics, Elsevier, vol. 36(2), pages 601-619.
    15. Strulik, Holger, 2012. "Poverty, voracity, and growth," Journal of Development Economics, Elsevier, pages 396-403.
    16. repec:spr:inrvec:v:64:y:2017:i:3:d:10.1007_s12232-017-0271-x is not listed on IDEAS
    17. Mehrdad Vahabi, 2011. "Appropriation, violent enforcement, and transaction costs: a critical survey," Public Choice, Springer, vol. 147(1), pages 227-253, April.
    18. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
    19. Benchekroun, H. & Ray Chaudhuri, A., 2009. "On Cleaner Technologies in a Transboundary Pollution Game," Discussion Paper 2009-23, Tilburg University, Center for Economic Research.
    20. Murray C. Kemp & Ngo Van Long, 2007. "Development Aid in the Presence of Corruption: Differential Games among Donors," CIRANO Working Papers 2007s-23, CIRANO.
    21. Russell Davidson & Adriana Cornea, 2008. "A Refined Bootstrap For Heavy Tailed Distributions," Departmental Working Papers 2008-03, McGill University, Department of Economics.

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    Keywords

    corruption; property rights; growth; appropriation cost;

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