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  3. American Economic Journal: Microeconomics
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  5. Power, Property Rights, and the Dynamics of Local Wealth Appropriation

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Power, Property Rights, and the Dynamics of Local Wealth Appropriation

  • Dan Cao
  • Roger Lagunoff
  • Yingqi Xu
American Economic Journal: Microeconomics (Forthcoming)

Abstract

We examine the dynamic connections between local wealth inequality and the local politics of property rights. A jurisdiction comprises a politically dominant in-group and a marginalized out-group. At each date, the jurisdiction exploits weaknesses in due process rights under the legal system to redistribute property claims away from the out-group and toward the in-group. It combines takings and zoning with the leveraging of public assets to deter legal challenges. This leverage varies over time and depends on status quo effects and asymmetries in legal treatment of assets. The results show how local politics and policies are linked to wealth disparities.

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