Expropriation risk and technology
نویسنده
چکیده
This paper develops a unified framework to analyze the dynamics of firm investment in countries with poor legal enforcement. The firm’s technology edge over the government generates endogenous property rights. Industry variation in the technology gap predicts a sectoral pecking-order of expropriations. Long-run investment distortions may be Pareto superior relative to persistent investment at the static optimum. The dynamics of investment and transfers depend on whether incentives (backloading) or efficiency (frontloading) concerns dominate at the initial division of surplus. An increase in government efficiency may reduce its welfare. The model provides a technology-driven rationale for the widespread use of conglomerate structures in emerging market countries. & 2011 Elsevier B.V. All rights reserved. All rights reserved. t the University of y advisors Doug Sorensen for many itment. My paper Fishman, William n and Harald Uhlig. , Johannes Bruder, Kashyap, Marlena Alessandro Pavan, nonymous referee ia, Duke, Harvard, , Stanford, UCLA, y of Pennsylvania erine Dusak Miller ship, as well as the pinions expressed
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