Governments have two mechanisms through which to secure the rights of investors: protecting property rights and allowing capital mobility. This article develops a formal theoretic framework that demonstrates how dictators use capital outflow openness as a substitute for poor property rights protection to attract more investment. They do so for two related reasons. First, more capital outflow openness increases the pool of capital dictators can expropriate from. Second, more capital outflow openness increases domestic wages, preventing working class revolts. When the working class is not too strong, the dictator would be able to retain workers' support by relying on capital outflow openness alone. However, when the working class is strong, the dictator would be forced to improve property rights protection to prevent a working class revolt, constraining the dictator's ability to expropriate in the future.
This article develops a new theory of how globalization in the form of increasing potential Foreign Direct Investment (FDI) inflows affects democratization. As the level of potential FDI inflows increases, workers become more willing to support democratization due to the large wage benefits from liberalizing FDI under democracy, while capitalists become less willing to support democratization due to their increasing need for protection from the dictator in the form of FDI restrictions. Increased demand for protection allows dictators to extract larger share of rents from capitalists. The effect of increasing potential FDI on democratization is ambiguous, because it increases both workers' incentive to revolt and dictators' resistance to democratization.
This article develops a new theory of how dictators can solve the guardianship dilemma. I study a dynamic game to show that the dictator may build a large army and deal with the guardianship dilemma by resorting to international conflicts. Specifically, when a military revolt is imminent, the dictator can obtain enough resources to buy off the military by attacking and ultimately defeating her international opponent. The framework thus shows that a weakly institutionalized polity may either have a small military, or have a large military and be more aggressive on the international stage.
We analyze lobbying as a contest in which lobbyists exert effort to pull a policy outcome in a multidimensional space in their preferred directions. We prove existence and uniqueness of equilibrium and perform comparative statics on the cost of effort and policy utility of the lobbyists. As cost of effort increases, the equilibrium effort of an individual lobbyist goes to zero, but the equilibrium policy outcome and inefficiency (i.e., total cost of effort) are constant. If lobbyists are more sensitive to policy losses further from their ideal points, then the equilibrium policy outcome converges to the Rawlsian policy, which maximizes the payoff of the worst-off lobbyist, and inefficiency may become large or go to zero, depending on the configuration of ideal points. If lobbyists are more sensitive to policy losses closer to their ideal points, then the equilibrium outcome converges to the mean of the lobbyists’ ideal points, and inefficiency goes to zero.
This article compares Plurality Voting (PV) and two forms of Runoff Elections (RE) in a setting in which (i) there are two majority-preferred alternatives, (ii) a strong minority backs a third alternative which would make the majority strictly worse off, and (iii) some of the majority voters are uninformed about the "correct" majority alternative. I show that in the informative equilibrium in Majority Runoff Elections (MRE), uninformed majority voters vote randomly with strictly positive probability, achieving partial information aggregation, while they always abstain in Automatic Runoff Elections (ARE), achieving full information aggregation and strictly improving the majority's welfare. However, uninformed majority voters do not abstain in PV, resulting in less information aggregation than in both MRE and ARE.
This paper argues that delegation in international organizations (IOs) is dominated by two closely related effects--Substitution Effect and Agency Effect. The Substitution Effect posits that great powers only delegate to IOs in crises where they have a lower stake, as the benefits associated with delegation outweigh the costs. The Agency Effect posits that conditional on delegation, international organizations will respond to great powers' interests by spending more resources in crises where they have a higher stake. We apply the theory to study the UN Peacekeeping Operations (UN PKOs) and examine how the United States interests shape UN PKOs. The results prove the existence of both effects in UN PKOs.
This paper develops a formal theoretic framework that demonstrates how authoritarian rulers can use the policy of foreign direct investment (FDI) liberalization to balance insider threats, i.e., military coups, and outsider threats, i.e., civil wars or foreign invasion. On the one hand, more FDI inflows increase domestic wages and reduce domestic monopoly rents, thus reducing the risk of a military coup by both increasing the minimal amount of spoils the elite is able to commit to transfer to the military (which is equal to domestic wages) and reducing the military's benefits from taking power (domestic monopoly rents). On the other hand, higher domestic wages also increase the military's incentive to capitulate to the external threat and return to the labor market, exacerbating the risk of an outsider overthrow. Thus, the ruling elite needs to balance insider and outsider threats when choosing the level of FDI liberalization.
This article examines the United States vote buying strategy in the UN Security Council by estimating a strategic statistical model. The results demonstrate that the United States is more willing to both punish democracies by withholding foreign aid for their opposition and reward democracies by increasing foreign aid for their support in the Security Council. However, the United States is much less willing to punish less developed countries for their opposition in the Security Council, even though coercion is a much more effective strategy against poorer countries due to their vulnerabilities. Our results reveal the dualism in the United States aid's purposes, and offer a mix of blessings and disappointments for the United States moral leadership.
Selected Work in Progress