Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach

Daron Acemoglu and Thierry Verdier

Working papers from Massachusetts Institute of Technology (MIT), Department of Economics

Abstract: We consider an economy where property rights are necessary to ensure sufficient rewards to ex ante investments. Because enforcement of property rights influence the ex post distribution of rents, there is room for corruption. We characterize the optimal organization of the society and optimal degree of property right enforcement subject to incentive constraints of the agents. We find that three frequently mentioned government failures arise quite naturally as part of the optimal mechanism; (i) rents for government employees, (ii) corruption, and (iii) misallocation of talent.

Keywords: PROPERTY RIGHTS; GENERAL EQUILIBRIUM; ECONOMIC DEVELOPMENT; LAW (search for similar items in EconPapers)
JEL-codes: D20 D23 H40 (search for similar items in EconPapers)
Pages: 29 pages
Date: 1996
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Citations: View citations in EconPapers (31)

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Related works:
Journal Article: Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach (1998)
Working Paper: Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach (1996)
Working Paper: Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach (1996)
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