rent-seeking incentives of lower level officials. This paper argues that the latter is an important source of regulatory uncertainty and that the greater is the variation in firms’ experiences with intraregional corruption, the less certainty over enforcement of regulations (or the “correct” bribe to elicit enforcement) and the fewer incentives to invest. Thus, we explicitly attempt to tie together literatures on administrative corruption and uncertainty, testing these hypotheses using data on intra-regional variation on corruption gleaned from aggregating firms’ responses on corruption questions in the Russia’s Regions Business Environment and Enterprise Performance Survey (RR BEEPS).

Second, the paper also examines _in-country inconsistency in property rights enforcement_ as another source of underexplored regulatory uncertainty tied to informal practice. Drawing on emerging literatures on violence as a non-market business tactic, we argue that the willingness of the state to selectively enforce property rights to achieve its own ends opens up the possibility of using non-market, extra-legal strategies to acquire firms and assets. In the contemporary Russian context, such strategies are carried out hand-in-glove with law enforcement officials, who often perpetrate violence against business owners in ways that enable rivals to strip them of assets (Gerber and Mendelson 2008; Firestone 2010; Gans-Morse 2014; Belokurova 2012; Rochlitz 2014). Although in theory formal legal protections prevent such practices, informal practices by state organs largely define the actual “rules-of-the-game” and govern expectations about the willingness of the state to participate in expropriation. By allowing some to make use of extra-legal strategies to strip others of property, the state therefore creates uncertainty about how and when fundamental protections will be enforced and depresses investment (North, Wallace, and Weingast 2009). Unlike administrative corruption, however, inconsistent property rights enforcement is a fundamental, existential threat to businesses and, in the Russian context, to the life and liberty of owners. To test this hypothesis, the paper draws on a measure that captures private “raiders” attacks on firms – hostile, often violent takeovers of firms by outsiders aided and abetted by law enforcement agencies.<sup>2</sup> Arguably, the greater the number of raider attacks for a given region, the greater the uncertainty and the less likely investment.

In this paper, we compare these two important aspects of regulation using data from the Russian Federation in order to contribute to the literature and to advise policy making more broadly. Empirically, our paper focuses on micro-level firm investment behavior and how it is shaped (or not) by burdensome informal practices associated with regulation and with uncertainty in these informal practices. Specifically we focus on corruption and violent, state-abetted “raider” attacks on firms. We note that our approach is in contrast to the more macrolevel focus of much of the existing literature, as well as its focus on formal, written regulation.

Our paper also differs empirically from many contributions in the literature on regulation and investment in that our focus is on a single country. Focusing on a single country allows us to dismiss a number of potentially confounding omitted variables – historical legacies, culture, formal legal environment, etc. – that bedevil crossnational studies. It also allows us to deal with the more subtle problems stemming from the fact that respondents in different countries may perceive corruption differently for cultural or historic reasons or may simply have a different scale in mind when answering questions about it (Treisman 2007).

To examine the relationship between regulation and investment, our primary data source is the Russian Firms in a Global Economy Survey (RuFIGE), which we combine with data on corruption from the 2011/12 EBRDWorld Bank Business Environment and Enterprise Performance Survey for Russian regions(RR BEEPS) and

> 2 This indicator is calculated using a publicly accessible database of complaints to the NGO “Business Against Corruption” from entrepreneurs claiming to have faced unlawful criminal prosecution (c.f. http://www.nocorruption.biz/?cat=6).

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