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Endogenous Property Rights, Conflict Intensity And Inequality In Asymmetric Rent-Seeking Contest

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  • Alexander M. Yarkin

    (National Research University Higher School of Economics)

Abstract

Does less inequality in wealth distribution imply better property rights protection? In this paper we show that this impact is non monotonous and is conditional on a) equilibrium type: conflict (rent-seeking) or peace, b) the reasons of changes in wealth distribution, and c) the size of the ruling class, “elite”. In the conflict stage, institutional quality positively depends on the wealth of the elite, but negatively – on the size of the elite class. However, the transition from conflict to peace stage (with no rent-seeking and fast growth) requires the reduction of inequality. This generates an institutional trap. Moreover, the intensity of rent-seeking behavior increases both with progressive redistribution of wealth and with widening of the ruling class. Our results allow characterizing wealth distributions, wherein it is better to redistribute wealth or to expand the ruling class in order to improve institutions and limit rent-seeking incentives

Suggested Citation

  • Alexander M. Yarkin, 2014. "Endogenous Property Rights, Conflict Intensity And Inequality In Asymmetric Rent-Seeking Contest," HSE Working papers WP BRP 72/EC/2014, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:72/ec/2014
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    More about this item

    Keywords

    property rights institutions; inequality; rent-seeking; wealth distribution; institutional traps; conflict; economic development;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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