Amegashie, J. Atsu (2006): INCOMPLETE PROPERTY RIGHTS, REDISTRIBUTION, AND WELFARE. Forthcoming in: Social Choice and Welfare
Download (162kB) | Preview
In a world where the private protection of property is costly, government redistribution can lead to an increase in aggregate output. This result is not new. The novelty of this paper lies in specifying the conditions under which this efficiency-enhancing redistribution improves everyone’s welfare including the welfare of those whose labor finances the redistributive program (i.e., the rich) and how this is affected by the protection of property rights. The state may directly enhance economic rights through investments in security and the protection of property or it may indirectly do so through the redistribution of income. Under certain conditions, redistribution becomes desirable in situations where the state has exhausted its ability to enhance efficiency through the direct enforcement of property rights. In this case, redistribution can make all members of a society better off. Specifically, this occurs when the cost of predation is sufficiently low and the technology of private protection of property rights is sufficiently weak. The adverse effects of redistribution may be the consequence but not the cause of state failure. The real cause is a corrupt and inept state.
|Item Type:||MPRA Paper|
|Institution:||University of Guelph|
|Original Title:||INCOMPLETE PROPERTY RIGHTS, REDISTRIBUTION, AND WELFARE|
|Keywords:||efficiency; incomplete property rights; predation; redistribution; welfare|
|Subjects:||D - Microeconomics > D6 - Welfare Economics
K - Law and Economics > K0 - General
H - Public Economics > H2 - Taxation, Subsidies, and Revenue
|Depositing User:||J. Atsu Amegashie|
|Date Deposited:||09. Jun 2007|
|Last Modified:||19. May 2015 06:39|
Acemoglu, D.K, and Robinson, J.A. (2000). Why did the West extend the franchise? Democracy, inequality and growth in a historical perspective. Quarterly Journal of Economics 115: 1167-1199.
Acemoglu, D.K, and Robinson, J.A. (2005). Economic Origins of Dictatorship and Democracy. Cambridge: Cambridge University Press.
Alesina, A., and Rodrik, D. (1994). Distributive politics and economic growth. Quarterly Journal of Economics 109: 465-490.
Alesina, A., and Perotti, R. (1996). Income distribution, political instability, and investment. European Economic Review 40: 1203-1228.
Alesina, A., and Angeletos, G-M. (2005). Fairness and redistribution. American Economic Review 95: 960-980.
Allen, D. W. (2002). The Rhino's Horn: Incomplete Property Rights and the Optimal Value of an Asset. Journal of Legal Studies 31: 339-358.
Barzel, Y. (2002). A Theory of the State: Economic Rights, Legal Rights, and the Scope of the State. Cambridge: Cambridge University Press.
Boadway, R., and Keen, M. (2000). Redistribution. In A.B. Atkinson and F. Bourguignon (eds.), Handbook of Income Distribution, North Holland.
Bos, D., and Kolmar, M. (2003). Anarchy, efficiency, and redistribution. Journal of Public Economics 87: 2431-2457.
Coase, R.H. (1937). The nature of the firm. Economica 16: 386-405.
Demsetz, H. (1967). Toward a theory of property rights. American Economic Review (P&P) 57: 347-359.
Gradstein, M. (2004). Governance and growth. Journal of Development Economics 73: 505-518.
Gradstein, M. (2007). Inequality, Democracy, and the Protection of Property Rights. Economic Journal 117: 252–269.
Grossman, H. (1994). Production, appropriation, and land reform. American Economic Review 84: 705-712.
Grossman, H. (1995). Robin Hood and the redistribution of income. European Journal of Political Economy 11: 399-410.
Grossman, H. (2002). “Make us a king”: anarchy, predation, and state. European Journal of Political Economy 18: 31-46.
Harms, P., and Zink, S. (2003). Limits to redistribution in a democracy: a survey. European Journal of Political Economy 19: 651-668.
Justino, P. (2005). Redistribution, Inequality, and Political Conflict. University of Sussex, PRUS Working Paper 18. http:// www.sussex.ac.uk/Units/PRU/wps/wp18.pdf
Kanbur, R. (2000). Income Distribution and Development. In A.B. Atkinson and F. Bourguignon (eds.), Handbook of Income Distribution, North Holland.
Konrad, K.A. (2002). Investment in the absence of property rights: the role of incumbency advantages. European Economic Review 46: 1521-1537.
Meltzer, A.H., and Richard, S.F. (1981). A rational theory of the size of government. Journal of Political Economy 89: 914-927.
Mueller, D.C. (2003). Public Choice III. Cambridge: Cambridge University Press.
Noh, J.S. (2002). Production, Appropriation, and Income Transfer. Economic Inquiry 40: 279-287.
North, D.C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
Palda, F. (1999). Property rights versus redistribution: which path to national wealth? Public Choice 101: 129-145.
Romer, T. (1975). Individual welfare, majority voting, and the properties of a linear income tax. Journal of Public Economics 4: 163-185.
Skaperdas, S. (1992). Cooperation, conflict, and power in the absence of property rights. American Economic Review 82: 720-739.
Usher, D. (1987). Theft as a paradigm for departures from efficiency. Oxford Economic Papers 39: 235-252.