This Paper studies the relationship between political wealth redistribution and the allocation of firm-ownership when … production requires an unobservable input. The economy's wealth distribution affects the equilibrium interest rate and the … allocation of entrepreneurial rents because wealth serves as a bonding device and determines agents’ ability and willingness to …

This Paper develops a model of political consensus in order to explain the missing link between inequality and …-interested politicians propose non-discriminatory policies. We study how much inequality can be sustained in a democracy and how the limits … to redistribution vary with initial inequality. We find that the bounds of the set of political equilibria may react in a …