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Roving bandits in action: Outside option and governmental predation in autocracies

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  • Libman, Alexander
  • Kozlov, Vladimir
  • Schultz, André

Abstract

The paper investigates the influence of outside options on the predatory behavior of autocrats. An outside option is referred to as the opportunity of an incumbent ruler to continue his career outside his current territory of control. The paper uses data on the effectiveness of tax collection and the repressiveness of tax jurisprudence for Russian regions in 2007-2009 and finds that regions ruled by governors with substantial outside options are characterized by more repressive behavior of tax authorities. However, surprisingly, the same tax authorities collect less additional revenues for the public budget. It conjectures that the presence of an outside option induces autocrats to behave like roving bandits they use tax audits to establish control over regional companies, but exploit this control to extract private rents rather than revenues for the regional budget used for public goods provision.

Suggested Citation

  • Libman, Alexander & Kozlov, Vladimir & Schultz, André, 2012. "Roving bandits in action: Outside option and governmental predation in autocracies," Frankfurt School - Working Paper Series 190, Frankfurt School of Finance and Management.
  • Handle: RePEc:zbw:fsfmwp:190
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    Cited by:

    1. Hagemann, Harald & Kufenko, Vadim, 2014. "The political Kuznets curve for Russia: Income inequality, rent seeking regional elites and empirical determinants of protests during 2011/2012," Violette Reihe: Schriftenreihe des Promotionsschwerpunkts "Globalisierung und Beschäftigung" 39/2013, University of Hohenheim, Carl von Ossietzky University Oldenburg, Evangelisches Studienwerk.
    2. Inklaar, Robert & Koetter, Michael & Noth, Felix, 2012. "Who's afraid of big bad banks? Bank competition, SME, and industry growth," Frankfurt School - Working Paper Series 197, Frankfurt School of Finance and Management.
    3. Alexander Libman & Janis N. Kluge, 2017. "Sticks or Carrots? Comparing Effectiveness of Government Shadow Economy Policies in Russia," Working Papers 364, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    4. Libman, Alexander, 2013. "Natural resources and sub-national economic performance: Does sub-national democracy matter?," Energy Economics, Elsevier, vol. 37(C), pages 82-99.
    5. Fabio Padovano & Ronald Wintrobe, 2013. "The Dictatorship of the Popes," Kyklos, Wiley Blackwell, vol. 66(3), pages 365-377, August.
    6. Boeing, Philipp & Mueller, Elisabeth & Sandner, Philipp, 2012. "What makes Chinese firms productive? Learning from indigenous and foreign sources of knowledge," Frankfurt School - Working Paper Series 196, Frankfurt School of Finance and Management.
    7. Libman Alexander & Schultz André & Graeber Thomas, 2016. "Tax Return as a Political Statement," Review of Law & Economics, De Gruyter, vol. 12(2), pages 377-445, July.
    8. André Schultz & Alexander Libman, 2015. "Is there a local knowledge advantage in federations? Evidence from a natural experiment," Public Choice, Springer, vol. 162(1), pages 25-42, January.
    9. Harald Hagemann & Vadim Kufenko, 2016. "Economic, structural and socio-psychological determinants of protests in Russia during 2011–2012," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(1), pages 3-30, January.
    10. Barbara Krug & Alexander Libman, 2015. "Commitment to local autonomy in non-democracies: Russia and China compared," Constitutional Political Economy, Springer, vol. 26(2), pages 221-245, June.
    11. Böing, Philipp & Müller, Elisabeth, 2012. "Technological Capabilities of Chinese Enterprises: Who is Going to Compete Abroad?," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62081, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    roving and stationary bandit; tax auditing; predatory government; Russian federalism;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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