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The market for protection and the origin of the state

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  • Kai Konrad

    ()

  • Stergios Skaperdas

    ()

Abstract

We examine a stark setting in which security or protection can be provided by self-governing groups of by for-profit entrepreneurs: kings, lords, or mafia dons. Though self-governance is best for the population, it faces problems of long-term viability. Typically, in providing security the stable market structure involves competing lords, a condition that leads to a tragedy of coercion: all the savings from the provision of collective protection are dissipated and welfare can be as low or lower than in the absence of a state.

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 50 (2012)
Issue (Month): 2 (June)
Pages: 417-443

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Handle: RePEc:spr:joecth:v:50:y:2012:i:2:p:417-443

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Related research

Keywords: Property rights; Anarchy; Governance; Competition; D30; D70; D74; H10;

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Citations

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Cited by:
  1. Stergios Skaperdas, 2008. "An economic approach to analyzing civil wars," Economics of Governance, Springer, vol. 9(1), pages 25-44, January.
  2. Anderson, James E. & Bandiera, Oriana, 2005. "Private enforcement and social efficiency," Journal of Development Economics, Elsevier, vol. 77(2), pages 341-366, August.
  3. Konrad, Kai A, 2001. "Investment in the Absence of Property Rights: The Role of Incumbency Advantages," CEPR Discussion Papers 3050, C.E.P.R. Discussion Papers.
  4. Jean-Pierre Tranchant, 2005. "Cooperation Breakdowns under Incomplete Property Rights," Public Economics 0506006, EconWPA.
  5. Martin Mcguire, 2002. "Property distribution and configurations of sovereign states: A rational economic model," Defence and Peace Economics, Taylor and Francis Journals, vol. 13(4), pages 251-270.
  6. Ethan Bueno De Mesquita & Catherine Hafer, 2008. "Public Protection Or Private Extortion?," Economics and Politics, Wiley Blackwell, vol. 20(1), pages 1-32, 03.
  7. Thomas Gall & Paolo Masella, 2007. "A Tale of Markets and Jungles in a Simple Model of Growth," JEPS Working Papers 07-004, JEPS.
  8. Mark Gradstein & Alberto E. Chong, 2008. "Who Needs Strong Leaders?," IDB Publications 6734, Inter-American Development Bank.
  9. Iyigun, Murat, 2006. "Ottoman Conquests and European Ecclesiastical Pluralism," IZA Discussion Papers 1973, Institute for the Study of Labor (IZA).
  10. Gustavo Federico Torrens, 2008. "The economic value of ideology," CEMA Working Papers: Serie Documentos de Trabajo. 378, Universidad del CEMA.
  11. Herschel I. Grossman, 1997. ""Make Us a King": Anarchy, Predation, and the State," NBER Working Papers 6289, National Bureau of Economic Research, Inc.
  12. Milante, Gary, 2007. "A kleptocrat's survival guide : autocratic longevity in the face of civil conflict," Policy Research Working Paper Series 4186, The World Bank.
  13. Konrad, Kai A & Leininger, Wolfgang, 2007. "Self-enforcing Norms and the Efficient Non-cooperative Organization of Clans," CEPR Discussion Papers 6333, C.E.P.R. Discussion Papers.
  14. Alberto Chong & Mark Gradstein, 2008. "¿A quién le hacen falta líderes autoritarios?," Research Department Publications 4564, Inter-American Development Bank, Research Department.
  15. Michelle R. Garfinkel & Stergios Skaperdas, 2006. "Economics of Conflict: An Overview," Working Papers 050623, University of California-Irvine, Department of Economics, revised Sep 2006.
  16. Iyigun, Murat, 2008. "Lessons from the Ottoman Harem (On Ethnicity, Religion and War)," IZA Discussion Papers 3556, Institute for the Study of Labor (IZA).
  17. Gradstein, Mark, 2004. "Governance and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 505-518, April.

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