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Cervellati, Matteo; Fortunato, Piergiuseppe; Sunde, Uwe (2012): Consensual and Conflictual Democratization. In: The B.E. Journal of Theoretical Economics, Vol. 12, No. 1
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This paper studies the interactions between democratization and theemergence of rule of law. We propose a model in which heterogeneousindividuals can make costly investments to protect their income againstexpropriation. The public enforcement of property rights is chosen bythe enfranchised population whose composition depends on the politicalregime in place. We characterize the politico-economic equilibria interms of property rights protection and political regime, and study therole of the different scenarios of democratization. The results suggest:(i) unequal control of natural resources is a central structuraldeterminant of the democratization scenario; (ii) democratic transitionsunder conflict may lead to failed democracies with poor rule of law;(iii) that democratic transitions supported by a large consensus mayserve as a coordination device thereby leading to better protection ofproperty rights and more stable polities.