Power, Property Rights, and the Dynamics of Local Wealth Appropriation

This paper examines the dynamic connections between wealth inequality and political decisions at the local level. We model a jurisdiction consisting of a politically dominant group and a marginalized one. At each date, the dominant group tries to appropriate ownership claims on productive assets. If its claims are legally challenged, the default outcome is determined by a right of possession (ROP) principle. Despite the ROP's assurance of equal protection, the jurisdiction systematically redistributes property claims toward the dominant group. The jurisdiction appropriates wealth by leveraging common assets - those that generate non-exclusive consumption flows - using zoning, takings, or NIMBY policies. We examine how this leverage varies across time and depends on whether a common asset is a public asset (generating benefits for all) or a NIMBY (generating benefits for the dominant group while harming the marginalized one). Finally, ROPs that prioritize some assets over others can exacerbate inequality.