State capacity and repression: A model of colonial rule

State capacity in colonial regimes can have spillover effects on the welfare of citizens if the colonizer is removed. This work shows that when spillovers are positive, investments in state capacity and repression by the colonizer are strategic complements: the colonizer needs a larger repression when state capacity is high, because the latter increases the incentives of the colonized to rebel. Therefore, determinants of investment in repression, such as geographic factors or idiosyncratic features of the colonizer, can affect state capacity. This work contributes to explain the heterogeneous levels of state capacity in non-settler colonies and has policy implications for present autocratic regimes.