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Expropriation risk and competition within the military

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  • Aney, Madhav S.
  • Ko, Giovanni

Abstract

How can agents in the military, who control the means of coercion, commit not to expropriate from producers? In this paper we propose competition within the military as one of the mechanisms that can deter predation and consequently create commitment. In our model, even if agents within the military could expropriate all output costlessly, it is attractive to protect producers from predating military units. This marginal defensive advantage and consequently defence is an effective way to potentially eliminate is because there is a other military units, reducing competition and leading to higher future payoffs. Our model predicts that greater internal competition within the military lowers the risk of expropriation and that this effect is strongest for countries with low institutional and economic development. Testing this prediction empirically, we find a robust negative relationship between competition within the military and expropriation risk. In line with our model this effect is strongest for countries at lower stages of institutional and economic development, and it weakens as the latter improve. These results indicate that there may be a short-run component to property rights institutions that varies with the degree of competition among agents who control the means of coercion.

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  • Aney, Madhav S. & Ko, Giovanni, 2015. "Expropriation risk and competition within the military," European Journal of Political Economy, Elsevier, vol. 39(C), pages 125-149.
    • Handle: RePEc:eee:poleco:v:39:y:2015:i:c:p:125-149
    DOI: 10.1016/j.ejpoleco.2015.04.006
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    More about this item

    Keywords

    Property rights; Military power; Checks and balances; Institutions;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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