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An enabling mechanism for the creation, adjustment, and dissolution of states and governmental units

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  • Hausken, Kjell
  • Knutsen, John F.

Abstract

The article proposes an enabling mechanism for the creation, adjustment and dissolution of governmental units, giving autonomy to each individual as in a direct democracy. The mechanism is designed such that Pareto optimality is possible, in contrast to earlier models which make various assumptions such as majority voting. Individuals are taken seriously acknowledging that they are best equipped to find their own solutions. The emphasis is on the practical approach of how individuals discover and implement their subjective preferences and how this discovery and implementation process can be facilitated and corresponding costs lowered. Governmental units are subjected to some of the same market forces as business firms. This brings the interaction between governmental units closer to a market structure, and serves to eliminate or reduce many of the coercive elements of government. --

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File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2010-32
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File URL: http://econstor.eu/bitstream/10419/41558/1/638559731.pdf
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Bibliographic Info

Article provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.

Volume (Year): 4 (2010)
Issue (Month): 32 ()
Pages: 1-38

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Handle: RePEc:zbw:ifweej:201032

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Keywords: Territorial units; individual liberty; individual decision making; individual wel-fare; competitive markets; public choice; governmental units; endogenous determination of borders; constitutional economics; political economy;

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  14. Alessandra Casella, 2000. "Market Mechanisms for Policy Decisions: Tools for the European Union," NBER Working Papers 8027, National Bureau of Economic Research, Inc.
  15. Wittman, Donald, 1991. "Nations and States: Mergers and Acquisitions; Dissolutions and Divorce," American Economic Review, American Economic Association, vol. 81(2), pages 126-29, May.
  16. Kjell Hausken & John F. Knutsen, 2002. "The Birth, Adjustment and Death of States," Public Economics 0205004, EconWPA.
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  18. Coase, R H, 1974. "The Lighthouse in Economics," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 357-76, October.
  19. Kjell Hausken, 2005. "Production and Conflict Models Versus Rent-Seeking Models," Public Choice, Springer, vol. 123(1), pages 59-93, April.
  20. Buchanan, James M & Faith, Roger L, 1987. "Secession and the Limits of Taxation: Toward a Theory of Internal Exit," American Economic Review, American Economic Association, vol. 77(5), pages 1023-31, December.
  21. Posner, Richard A, 1975. "The Social Costs of Monopoly and Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 807-27, August.
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  24. Caplan, Bryan, 2001. " Standing Tiebout on His Head: Tax Capitalization and the Monopoly Power of Local Governments," Public Choice, Springer, vol. 108(1-2), pages 101-22, July.
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