European Political Economy Review ISSN 1742-5697 Vol. 2, No. 1 (Summer 2004), pp. 36-50 www.eper.org The Political Economy of Post- Communist Autocracy: The Continuum Between Dictatorship and Democracy Radmilo Pešić and Branislav Boričić * Abstract The article deals with the economic behaviour of a hypothetical politi- cal leader in the institutionally underdeveloped democratic environ- ment of a transitional society. By using Stigler-Peltzman’s model of economic regulation, it has been shown that there is no optimal solu- tion for an autocratic leader. In the long run, wealth transfer to politi- cal supporters alone is not sufficient for the autocrat to stay in power. That’s why such regimes are generally unstable, and will ultimately be either overthrown or transformed into ‘hard’ dictatorships. The mar- ginal costs of regime protection and opposition, crucial for the politi- cal behaviour of conflicted social groups, can be considered as politi- cal turning points responsible for sudden and unexpected social changes. Keywords: autocracy, economic regulation, post-communist tran- sition * Radmilo Pešić, Professor of Economics, Department of Agricultural Economics, Faculty of Agriculture; Branislav Boričić, Professor of Mathematics, Faculty of Economics; both University of Belgrade, Serbia and Montenegro