The Breakup of Nations: A Political Economy Analysis
AbstractThis paper develops a model of the breakup or unification of nations. In each nation the decision to separate is taken by majority voting. A basic trade-off between the efficiency gains of unification and the costs in terms of loss of control on political decisions is highlighted. The model emphasizes political conflicts over redistribution policies. The main results of the paper are (1) when income distributions vary across regions and the efficiency gains from unification are small, separation occurs in equilibrium; and (2) when all factors of production are perfectly mobile, all incentives for separation disappear. Copyright 1997, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 112 (1997)
Issue (Month): 4 (November)
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Web page: http://mitpress.mit.edu/journals/
Other versions of this item:
- Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
- H10 - Public Economics - - Structure and Scope of Government - - - General
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
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