Department of Economics invites you to a talk by Dr. Sourav Bhattacharya, Royal Holloway - University of London


"RESISTANCE, REDISTRIBUTION AND INVESTOR-FRIENDLINESS"


Dr. Sourav Bhattacharya is currently a Reader in Economics at Royal Holloway - University of London (RHUL). Prior to joining RHUL he was an Assistant Professor at the University of Pittsburgh and a Visiting Assistant Professor at the Wallis Institute of Political Economy, University of Rochester.


The title of his talk is, "Resistance, Redistribution and Investor-Friendliness". Poor communities sometimes resist private investment and destroy economic surplus even if the government has the willingness and ability to redistribute. He interprets such acts of resistance as demands for redistribution: Destruction contains credible information about how the affected group values surplus, and such information is used by the government in implementing the optimal redistribution policy. The extent of destruction is increasing in the extent of political marginalization of the affected group. Resistance not only destroys economic surplus: It also mutes the investor's incentives to create surplus. The government uses a tax/subsidy on the investor to maximize weighted social surplus, and he shows that the possibility of destruction may force the government to be too soft in its negotiations with the investor. He discusses several policy instruments that have the potential to improve welfare: These include compensation floor for the affected group, legal or financial protection for the investor and licensing fees for the investor.