What Drives the Private Provision of Security: Evidence from Russian Regions

This paper studies the influence of institutional quality and income inequality on the private provision of security. It is argued that the effects of both factors are far from straightforward and should be thoroughly examined when variation in institutional quality and income inequality is high. To conduct empirical analysis, data on the regions of Russia between 2009 and 2016 are used. It is hypothesized and empirically supported that institutional quality affects the relationship between the private and public provision of security. Weak institutions make the private provision of security a substitute for the public provision of security, whereas strong institutions promote complementarity between the two. It is also shown that income inequality increases the private provision of security when inequality is low and decreases it when inequality is high. This result can be attributed to economies of scale.