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How does the risk of expopriation affect the economy

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Consider two countries, A and B, that have identical physical endowments of a key natural resource. In country A, any profits that are made from extracting that resources are subject to confiscation by the goverment, while in country B, there is no risk. How does the risk of expopriation affect the economic endowment of the two nations? In which nation are people richer?

Reference no: EM13237448

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