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Democracy, collective action and intra-elite conflict

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  • Ghosal, Sayantan
  • Proto, Eugenio

Abstract

We analyze a model where there is uncertainty about the future power of two ex-ante symmetric elites to appropriate surplus, and ex-ante surplus sharing agreements are not binding. We show that in an oligarchy, the stronger elite appropriates the entire available surplus, whereas a democracy results in a more balanced surplus allocation between the two elites. In a democracy, the newly enfranchised non-elite organize to act collectively, so that the weaker elite can credibly threaten to form a coalition with the organized non-elite against the stronger elite. Such a threat ensures that the more balanced surplus sharing proposal chosen by majority voting is renegotiation-proof. Therefore, sufficiently risk-averse elites unanimously choose democracy as a form of insurance against future imbalances in relative power. We emphasize that franchise extension to, and low cost of organizing collective political activity for, the non-elite are both necessary features of a democracy. Our formal analysis can account for the stylized facts that emerge from a comparative analysis of Indian and Western European democracies.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 93 (2009)
Issue (Month): 9-10 (October)
Pages: 1078-1089

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Handle: RePEc:eee:pubeco:v:93:y:2009:i:9-10:p:1078-1089

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Web page: http://www.elsevier.com/locate/inca/505578

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Keywords: Democracy Conflict Collective action Coalition formation Party formation Bargaining Risk-sharing;

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References

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Citations

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Cited by:
  1. Ghosal, Sayantan & Proto, Eugenio, 2008. "Democracy, Collective Action and Intra-elite Conflict," The Warwick Economics Research Paper Series (TWERPS) 844, University of Warwick, Department of Economics.
  2. Campos, Nauro F & Coricelli, Fabrizio, 2009. "Financial Liberalization and Democracy: The Role of Reform Reversals," IZA Discussion Papers 4338, Institute for the Study of Labor (IZA).
  3. Galiani, Sebastian & Torrens, Gustavo, 2014. "Autocracy, democracy and trade policy," Journal of International Economics, Elsevier, vol. 93(1), pages 173-193.
  4. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2014. "Violence during democratization and the quality of democratic institutions," European Economic Review, Elsevier, vol. 66(C), pages 226-247.
  5. Pino, Francisco J. & Vidal-Robert, Jordi, 2014. "Habemus Papam? Polarization and Conflict in the Papal States," CAGE Online Working Paper Series 189, Competitive Advantage in the Global Economy (CAGE).
  6. George Tridimas, 2011. "A political economy perspective of direct democracy in ancient Athens," Constitutional Political Economy, Springer, vol. 22(1), pages 58-82, March.

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