Insecure property rights and growth: the role of appropriation costs, wealth effects, and heterogeneity

Ngo Long and Gerhard Sorger

Economic Theory, 2006, vol. 28, issue 3, 513-529

Abstract: We extend the model from Tornell and Velasco [13] and Tornell and Lane [12] by adding three features: (i) extracting the common property asset involves a private appropriation cost, (ii) agents derive utility from wealth as well as from consumption, and (iii) agents can be heterogeneous. We show that both an increase in the appropriation cost and, when appropriation costs vary across agents, an increase in the degree of heterogeneity of these costs reduce the growth rate of the public capital stock. We also show that, in the interior equilibrium, the private asset can have either a lower or a higher money rate of return than the common property asset. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Economic growth; Strategic saving; Differential game; Markov-perfect equilibrium. (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (33)

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Working Paper: Insecure Property Rights and Growth: The Roles of Appropriation Costs, Wealth Effects, and Heterogeneity (2004)
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DOI: 10.1007/s00199-005-0635-4

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