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Efficient anarchy

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Author Info
Peter Leeson ()

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Abstract

Can anarchy be efficient? This paper argues that for reasons of efficiency, rational, wealth-maximizing agents may actually choose statelessness over government in some cases. Where markets are sufficiently thin or where government is prohibitively costly, anarchy is the efficient mode of social organization. If total social wealth under conditions of relatively lower levels of trade is not substantially smaller than it is under conditions of relatively higher levels of trade, the cost of government may exceed the social benefits it provides. Likewise, if the cost of a state is sufficiently large, even substantial differences in social wealth under these two scenarios may prove too small to justify the formation of government from a cost-benefit perspective. The framework I provide explains the persistence of anarchy in two major areas where we tend to observe it: among primitive societies and at the global level. (JEL P48) Copyright Springer Science+Business Media B.V. 2007

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File URL: http://hdl.handle.net/10.1007/s11127-006-9071-7
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Publisher Info
Article provided by Springer in its journal Public Choice.

Volume (Year): 130 (2007)
Issue (Month): 1 (January)
Pages: 41-53
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:pubcho:v:130:y:2007:i:1:p:41-53

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Related research
Keywords: Anarchy; Social efficiency; Institutions; Nuer; International trade;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Martin C. McGuire & Mancur Olson Jr., 1996. "The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 72-96, March. [Downloadable!] (restricted)
  2. Casella, Alessandra, 1996. "On market integration and the development of institutions: The case of international commercial arbitration," European Economic Review, Elsevier, vol. 40(1), pages 155-186, January. [Downloadable!] (restricted)
  3. Walter Mattli, 2001. "Private Justice in a Global Economy: From Litigation to Arbitration," International Organization, MIT Press, vol. 55(4), pages 919-947, October. [Downloadable!] (restricted)
  4. Leeson, Peter T., 2005. "Endogenizing fractionalization," Journal of Institutional Economics, Cambridge University Press, vol. 1(01), pages 75-98, June. [Downloadable!]
  5. Peter T. Leeson, 2007. "Trading with Bandits," Journal of Law & Economics, University of Chicago Press, vol. 50, pages 303-321. [Downloadable!]
  6. Oliver Volckart & Antje Mangels, 1999. "Are the Roots of the Modern Lex Mercatoria Really Medieval?," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 427-450, January.
  7. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August. [Downloadable!] (restricted)
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  8. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June. [Downloadable!] (restricted)
  9. Peter T. Leeson, 2006. "Self-Enforcing Arrangements and Heterogeneous Groups," American Journal of Economics and Sociology, Blackwell Publishing, vol. 65(4), pages 891-907, October. [Downloadable!] (restricted)
  10. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December. [Downloadable!]
  11. R. Hirschowitz, 1989. "The Other Path: The Invisible Revolution in the Third World," South African Journal of Economics, Economic Society of South Africa, vol. 57(4), pages 266-272, December. [Downloadable!] (restricted)
  12. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank. [Downloadable!]
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  13. Bruce Benson, 1999. "To Arbitrate or To Litigate: That Is the Question," European Journal of Law and Economics, Springer, vol. 8(2), pages 91-151, September. [Downloadable!] (restricted)
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  14. Avinash Dixit, 2003. "Trade Expansion and Contract Enforcement," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1293-1317, December. [Downloadable!] (restricted)
  15. Mattli, Walter, 2001. "Private Justice in a Global Economy: From Litigation to Arbitration," International Organization, Cambridge University Press, vol. 55(04), pages 919-947, November. [Downloadable!]
  16. Avner Greif, 2002. "Institutions and Impersonal Exchange: From Communal to Individual Responsibility," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(1), pages 168-, March.
  17. Benson, Bruce L, 1999. " An Economic Theory of the Evolution of Governance and the Emergence of the State," The Review of Austrian Economics, Springer, vol. 12(2), pages 131-60, November. [Downloadable!] (restricted)
  18. Zerbe, Richard O. & Anderson, C. Leigh, 2001. "Culture And Fairness In The Development Of Institutions In The California Gold Fields," The Journal of Economic History, Cambridge University Press, vol. 61(01), pages 114-143, March. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Powell, Benjamin & Stringham, Edward P., 2008. "Public Choice and the Economic Analysis of Anarchy: A Survey," Working Papers 2008-7, Suffolk University, Department of Economics. [Downloadable!]
    Other versions:
  2. Claudia Williamson, 2009. "Informal institutions rule: institutional arrangements and economic performance," Public Choice, Springer, vol. 139(3), pages 371-387, June. [Downloadable!] (restricted)
  3. Peter Leeson, 2007. "Edward P. Stringham, ed., Anarchy and the Law: The Political Economy of Choice," Public Choice, Springer, vol. 133(1), pages 253-256, October. [Downloadable!] (restricted)
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