Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185401
Authors: 
Grigoryan, Aram
Polborn, Mattias
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7203
Abstract: 
We analyze a theoretical model in which entrepreneurs’ property rights are threatened by “raiders” who can challenge them to a contest for control of their firms. Entrepreneurs have heterogeneous productivity, and decide how much capital to invest before raiders decide whom to attack. In equilibrium, low productivity entrepreneurs are unaffected by the existence of raiders, while mid- and high-productivity entrepreneurs suffer. However, while raiders essentially act like a tax for the highest productivity entrepreneurs, the investment behavior of mid-productivity entrepreneurs who try to avoid an attack is more drastically affected. Our model provides a novel theoretical explanation for the “missing middle” observed in many countries with insecure property rights.
Subjects: 
property rights
rent-seeking
corruption
missing middle
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.