Oligarchs and the Russian government: fight against corruption or the private business?
Many scholars have interpreted the Russian government’s attack on the private oil companies, as in the most famous Yukos Crisis, as a legitimate battle against corruption. However, in the transition economies, the state can abuse its power by acting like a monopoly and not letting any competitive firms to operate. It can easily do so, by disguising its aim of retaining its monopoly power as a “fight with corruption”. In this paper we build a game between the state firm (government) and the private firm (oligarchs), where the oligarchs can be of “strong” or “weak” type. Oligarchs use the amount of bribe to signal their type, and try to influence the government’s decision of whether confiscating the private firm by accusing it of being corrupt, versus letting her operate and collecting bribe.
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- Daron Acemoglu & James Robinson, 1999.
"Democratization or Repression?,"
99-27, Massachusetts Institute of Technology (MIT), Department of Economics.
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