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Roving bandits in action: Outside option and governmental predation in autocracies

Alexander Libman, Vladimir Kozlov and André Schultz

No 190, Frankfurt School - Working Paper Series from Frankfurt School of Finance and Management

Abstract: The paper investigates the influence of outside options on the predatory behavior of autocrats. An outside option is referred to as the opportunity of an incumbent ruler to continue his career outside his current territory of control. The paper uses data on the effectiveness of tax collection and the repressiveness of tax jurisprudence for Russian regions in 2007-2009 and finds that regions ruled by governors with substantial outside options are characterized by more repressive behavior of tax authorities. However, surprisingly, the same tax authorities collect less additional revenues for the public budget. It conjectures that the presence of an outside option induces autocrats to behave like roving bandits they use tax audits to establish control over regional companies, but exploit this control to extract private rents rather than revenues for the regional budget used for public goods provision.

Keywords: roving and stationary bandit; tax auditing; predatory government; Russian federalism (search for similar items in EconPapers)
JEL-codes: D72 D73 H77 P26 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-cis
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