pillage and property this paper introduces a class of coalitional games called pillage games as a model of hobbesian anarchy any coalition can pillage costlessly and with certainty any less powerful coalition power is endogenous so a pillage game does not have a characteristic function but pillage provides a domination concept that defines a stable set which represents an endogenous balance of power every stable set contains only finitely many allocations and can be represented as a farsighted core additional results are obtained for particular games including the game in which the power of each coalition is determined by its total wealth

macroeconomic issues of soviet reform the title of this paper is not yet anachronistic for the soviet heritage of domestic and interrepublican economic arrangements sets the initial constraints for economic reform in the republics of the former soviet union a standard approach to economic reform in socialist economies has developed over the last two years on the basis of both experience especially in poland and analysis see e g joint study of the soviet economy 1990 david lipton and jeffrey sachs 1990 fischer and alan gelb 1991 we start by reviewing this new orthodox prescription and then examine the developing russian reform program in its light we turn next to the special aspects of reform in the former soviet republics interrepublican economic relations and reform coordination and conclude with a brief discussion of the role of the west

endogenous insecurity and economic development abstract we explore the implications of endogenous credit market imperfections for the endogenous relationship between investment insecurity and the process of economic development in the initial stages of development the fraction of agents engaged in nonproductive diversionary activities e g rent seeking grows as the opportunities to gain from diversionary activities expand in later stages however diversion falls as capital market imperfections are overcome and productive activities become more secure and more profitable we detail the forces that determine whether the insecurity generated by an economy s early development will choke off the growth process we also compare the cost effectiveness of alternative policies designed to prevent diversion

exogenous shocks the criminal elite and increasing gender inequality in chicago organized crime criminal organizations like legitimate organizations adapt to shifts in markets competition regulations and enforcement exogenous shocks can be consequential moments of power consolidation r

reward structures and the allocation of talent as relative rewards that different professions receive are a key factor in the allocation of talent what determines the reward structure of a society is an important question this paper develops an equilibrium model of the allocation of talent between productive and unproductive activities such as rent seeking the existence of rent seeking creates a negative externality on productive agents and implies that relative rewards are endogenously determined the same externality can also lead to the existence of multiple equilibria each with different reward structures in a dynamic setting allocations of past generations as well as expectations of future allocations influence current rewards and the society may get trapped in a rent seeking steady state equilibrium the paper also discusses how the non pecuniary reward structure can be influenced by equilibrium selection and a historical example that suggests the presence of a causal link from the allocation of talent to non pecuniary rewards

a political economy approach to the neoclassical gradualist model of transition a political economy approach to the neoclassical gradualist model of transition requires the exposition of what i define the primary elements of the model which are economic analysis definition of a good society speed political structure ideological structure and whether the initial conditions were incorporated in the model after the identification of the primary elements of the neoclassical gradualist model the next step is to identify secondary elements the desired changes with respect to price liberalization stabilization privatization institutional structure monetary policy and the financial system fiscal policy international trade and foreign aid and social policy the analytical framework developed makes possible to understand the neoclassical gradualist model from a new and more enlightening perspective we are better able to comprehend the complexities involved and the disagreements about the reform process the adoption of a gradual process of transition did not only involve specifying the required policies of a successful transition but also entailed a process a sequence by which the reforms should be introduced as such a process of transition consistent with the policies recommended by the neoclassical gradualists economists is developed the conclusion reveals the inconsistencies in the model copyright blackwell publishers ltd 2005

vulnerable trade the dark side of an edgeworth box abstract we examine incentives to seize and defend goods offered for trade in an edgeworth box economy appropriation possibilities generate equilibrium of coerced redistribution and voluntary trade in a reduced box potential mutual gains remain untaken because the prospect of piracy creates a price wedge wherein the effective relative price is lowered for the exporter and raised for the importer as the vulnerability of one or both goods increases the price wedge widens causing trade to diminish if vulnerability becomes sufficiently high then equilibrium with trade ceases to exist in the edgeworth box economy

rent seeking and resource booms abstract this paper develops a model of rent seeking in which the opportunity cost of rent seeking is foregone entrepreneurship it provides conditions under which resource booms tend to lead to an increase in rent seeking activity and those in which they induce entrepreneurship we identify an important difference between the two activities which leads resource booms to bias gains in favour of rent seeking over entrepreneurship but we also show that this bias depends on the nature of the initial equilibrium

a model of institutional formation within a rent seeking environment abstract this paper presents a game theoretic model in which some fraction of output is appropriated from entrepreneurs entrepreneurs are able to form a league to prevent this appropriation but this might not be individually rational because of either the free rider problem or coordination failure the model also shows that poorer countries are less able to form this league and so might not be able to develop institutions establishing property rights

the distribution of income in a despotic society a distribution of income between rulers and subjects can be derived as an equilibrium of violence rather than from considerations of marginal products of owned factors of production society is organized in ranks and the occupants of each rank are provided with incomes just sufficient that obedience is preferable to rebellion to incorporate such considerations into a model it is necessary to recognize phenomena that are normally excluded from economic analysis combat the mortality rate from natural causes and from violence as a component of the utility function and a rudimentary technology of control

historical legacies a model linking africa s past to its current underdevelopment abstract recent studies have found evidence linking africa s current under development to colonial rule and the slave trade given that these events ended long ago why do they continue to matter today i develop a model exhibiting path dependence which provides one explanation for why these past events may have lasting impacts the model has multiple equilibria one equilibrium with secure property rights and a high level of production and others with insecure property rights and low levels of production i show that external extraction when severe enough causes a society initially in the high production equilibrium to move to a low production equilibrium because of the stability of low production equilibria the society remains trapped in this suboptimal equilibrium even after the period of external extraction ends the model provides one explanation why africa s past events continue to matter today

crime and social interactions the high variance of crime rates across time and space is one of the oldest puzzles in the social sciences this variance appears too high to be explained by changes in the exogenous costs and benefits of crime we present a model where social interactions create enough covariance across individuals to explain the high cross city variance of crime rates this model provides an index of social interactions which suggests that the amount of social interactions is highest in petty crimes moderate in more serious crimes and almost negligible in murder and rape

the process of socialist economic transformation in this paper we consider the reform process in those central and east european countries that have made the decision to move from a more or a less planned socialist system to a private market economy one in which private ownership predominates and most resources are allocated through markets because the reform process is both complex and intertwined with political factors especially the shift towards representative democracy and because there are substantial differences among the reforming countries no single detailed road map can guide the way to the new systems rather the paper sets out general considerations that provide a framework for reform and relates the choices to some initial conditions of the various reforming countries the framework applies also to the soviet union or in the event of its disintegration to its successor states as they move to market systems

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

prosperity without conflict abstract social conflict and slow growth are features of many developing economies this paper considers the role institutions of property rights and conflict management can play in both achieving prosperity and mitigating conflict in these economies we study how introducing conflict over economic distribution into an otherwise standard model of growth can shape optimal second best taxation policy when diversionary activities cannot be taxed in this context we find that the maximization of economic efficiency may call for a reduction in growth in order to mitigate the problem of diversion even though the economy s growth is inefficiently slow in the absence of taxation this is so when institutional quality is sufficiently poor but not otherwise the paper warns against the conventional justification of growth promoting policies on efficiency grounds independently of institutions

effective property rights conflict and growth abstract this paper shows how the interaction between conflict and growth can give rise to a nonmonotone relationship between property rights and social welfare this interaction is illustrated in a model of endogenous growth in which equilibrium diversion of resources is the cost of securing effective property rights a symmetric equilibrium allocation associated with more secure property rights and faster growth can be pareto dominated by one associated with poorer property rights and slower growth faster growth can exacerbate the problem of diversion whenever property rights are sufficiently poor these results call for caution before a society decides to pursue economic growth independently of the institutional structure of property rights furthermore if this structure is inappropriate piecemeal reform might not be in the interest of society and a substantial reform might be necessary if it is to be welfare improving

how network externalities can exacerbate intergroup inequality the authors describe a common but largely unrecognized mechanism that produces and exacerbates intergroup inequality the diffusion of valuable practices with positive network externalities through social networks whose members differentially possess characteristics associated with adoption the authors examine two cases the first to explore the mechanism s implications and the second to demonstrate its utility in analyzing empirical data in the first the diffusion of internet use network effects increase adoption s benefits to associates of prior adopters an agent based model demonstrates positive monotonic relationships given externalities between homophily bias and intergroup inequality in equilibrium adoption rates in the second rural urban migration in thailand network effects reduce risk to persons whose networks include prior migrants analysis of longitudinal individual level migration data indicates that network homophily interacts with network externalities to induce divergence of

crime induced poverty traps abstract poverty makes thieves and thieves hamper economic growth we study these linkages in a model of modern sector job creation job creation has two effects higher labor demand tends to lower crime while higher output gives more to steal tending to increase crime at low levels of modernization the second effect dominates and as a consequence the model has decreasing returns to scale at higher levels of modernization there is increasing returns to scale due to declining crime the economy may end up in a poverty trap with high crime and low production or obtain full modernization with low crime rates the danger of ending up in a poverty trap has implications for economic policies we show for instance that a reform intended to improve efficiency may throw the economy into a vicious circle of increasing crime and stagnation if implemented too fast

the dynastic cycle and the stationary state a dynastic cycle is a periodic alternation of society between despotism and anarchy in a society of farmers rulers and bandits population growth simultaneously impoverishes farmers and reduces the ruler s surplus per head society evolves into a despotic stationary state or into a dynastic cycle dependent on whether poverty among farmers chokes off population growth before the surplus shrinks to the point where rulers turn to banditry copyright 1989 by american economic association

a general equilibrium model of crime and punishment abstract a model of crime and punishment is developed where individuals who differ in their earnings abilities choose between work and crime taking the probability and consequences of punishment into account an aggregate relationship between the probability of punishment and the level of crime is derived there is also a relationship between enforcement spending the number of criminals and the number punished in such an economy the possibility of multiple equilibria and the effects of changes in enforcement spending and in inequality on the levels of crime and punishment are discussed there is also discussion of social welfare and voting behavior

shocking labor supply a reassessment of the role of world war ii on women s labor supply the most prominent feature of the female labor force across the past hundred years is its enormous growth but many believe that the increase was discontinuous our purpose is to identify the short and long run impacts of wwii on the labor supply of women who were currently married in 1950 and 1960 we use mobilization rates for various groups of men by age race fatherhood to see whether there was a wartime impact we find that an aggregate mobilization rate produces the largest and most robust impacts on both weeks worked and the labor force participation of married white non farm women the impact moreover was experienced primarily by women in the top half of the education distribution women who were married but without children during wwii were the group most impacted by the mobilization rate in 1950 although by 1960 wwii still influenced the labor supply decisions of them as well as those with children during wwii we end the paper with a resolution between the watershed and revisionist views of the role of wwii on female labor supply

equilibrium in the jungle in the jungle power and coercion govern the exchange of resources we study a simple stylized model of the jungle that mirrors an exchange economy we de ne the notion of jungle equilibrium and demonstrate that a number of standard results of competitive markets hold in the jungle jel classi cation c7 d4 s477 b201

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property