Autocracy, Corruption, and International Sanctions: The Role of Oligarchs

Abstract This paper is a theoretical attempt to explore economic foundation of autocracy, whereby oligarchy and corruption are essential elements. We show that, in our setup, the rise of an autocratic political system crucially depends on an oligarchic economic system which in turn is influenced by corruption costs stemming from anti-corruption institutions. We also use our model to study the effects of smart international sanctions. We derive conditions under which smart international sanctions would be effective in moderating the behavior of an autocrat. Moreover, we study the micro structure of the oligarchy market.