Economics at your fingertips  

Property rights, extortion and the misallocation of talent

Ashantha Ranasinghe ()

European Economic Review, 2017, vol. 98, issue C, 86-110

Abstract: Extortion is a severe obstacle to doing business in many countries, varying both in its frequency and magnitude across establishments. This paper presents a model of extortion to account for these features and assess its quantitative effects. In the model, entrepreneur capital is subject to extortion which affects the extensive and intensive margins of entrepreneurship. Extortion rates are endogenous and hump-shaped across entrepreneurs despite common property rights. The quantitative analysis is guided by micro-level evidence related to extortion in Poland and yields a number of implications broadly consistent with establishment-level facts in developing economies. For measures of property rights within a plausible range, output losses can be upwards of 10 percent.

Keywords: Extortion; Misallocation; Establishment size; Property rights (search for similar items in EconPapers)
JEL-codes: O1 O4 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Property Rights, Extortion and the Misallocation of Talent (2015) Downloads
Working Paper: Property Rights, Extortion and the Misallocation of Talent (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-08-30
Handle: RePEc:eee:eecrev:v:98:y:2017:i:c:p:86-110