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The Market for Protection and the Origin of the State

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Author Info
Kai A. Konrad ()
Stergios Skaperdas ()

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Abstract

We examine a stark setting in which security or protection can be provided by self-governing groups or by for-profit entrepreneurs (kings, kleptocrats, or mafia dons). Though self-governance is best for the population, it faces problems of long-term viability. Typically, in providing security the equilibrium 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 as, or even lower than, in the absence of the state.

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Publisher Info
Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1578.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1578

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Related research
Keywords: property rights anarchy government

Other versions of this item:

Find related papers by JEL classification:
D30 - Microeconomics - - Distribution - - - General
D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
H10 - Public Economics - - Structure and Scope of Government - - - General

This paper has been announced in the following NEP Reports:

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. Grossman, Herschel I. & Noh, Suk Jae, 1994. "Proprietary public finance and economic welfare," Journal of Public Economics, Elsevier, vol. 53(2), pages 187-204, February. [Downloadable!] (restricted)
  2. 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)
  3. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May. [Downloadable!] (restricted)
  4. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February. [Downloadable!] (restricted)
  5. Skaperdas, S. & Syropoulos, C., 1993. "Gangs as Primitive States," Papers 92-93-13, California Irvine - School of Social Sciences.
    Other versions:
  6. Herschel I. Grossman, 1997. ""Make Us a King": Anarchy, Predation, and the State," NBER Working Papers 6289, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Keith N. Hylton, 1996. "Optimal Law Enforcement and Victim Precaution," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 197-206, Spring. [Downloadable!] (restricted)
  8. Bardhan, Pranab, 1990. "Symposium on the State and Economic Development," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 3-7, Summer. [Downloadable!] (restricted)
  9. Brennan, Geoffrey & Buchanan, James M., 1978. "Tax instruments as constraints on the disposition of public revenues," Journal of Public Economics, Elsevier, vol. 9(3), pages 301-318, June. [Downloadable!] (restricted)
  10. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
  11. Grossman, Herschel I, 1994. "Production, Appropriation, and Land Reform," American Economic Review, American Economic Association, vol. 84(3), pages 705-12, June. [Downloadable!] (restricted)
  12. Usher, Dan, 1989. "The Dynastic Cycle and the Stationary State," American Economic Review, American Economic Association, vol. 79(5), pages 1031-44, December. [Downloadable!] (restricted)
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  13. Ben-Shahar, Omri & Harel, Alon, 1995. "Blaming the Victim: Optimal Incentives for Private Precautions against Crime," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(2), pages 434-55, October.
  14. Marcouiller, Douglas & Young, Leslie, 1995. "The Black Hole of Graft: The Predatory State and the Informal Economy," American Economic Review, American Economic Association, vol. 85(3), pages 630-46, June. [Downloadable!] (restricted)
  15. Moselle, Boaz & Polak, Benjamin, 2001. "A Model of a Predatory State," Journal of Law, Economics and Organization, Oxford University Press, vol. 17(1), pages 1-33, April.
  16. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September. [Downloadable!] (restricted)
  17. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer, vol. 7(2), pages 283-290.
  18. Merwan Engineer, 1986. "Taxes, Public Goods and the Ruling Class," Working Papers 672, Queen's University, Department of Economics.
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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. Murat Iyigun, 2006. "Ottoman Conquests and European Ecclesiastical Pluralism," IZA Discussion Papers 1973, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Stergios Skaperdas, 2007. "An Economic Approach to Analyzing Civil War," Working Papers 060715, University of California-Irvine, Department of Economics. [Downloadable!]
    Other versions:
  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. [Downloadable!] (restricted)
    Other versions:
  4. Thomas Gall & Paolo Masella, 2007. "A Tale of Markets and Jungles in a Simple Model of Growth," JEPS Working Papers 07-004, JEPS. [Downloadable!]
  5. 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. [Downloadable!] (restricted)
    Other versions:
  6. Herschel I. Grossman, 1997. ""Make Us a King": Anarchy, Predation, and the State," NBER Working Papers 6289, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Jean-Pierre Tranchant, 2005. "Cooperation Breakdowns under Incomplete Property Rights," Public Economics 0506006, EconWPA. [Downloadable!]
  8. 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, January. [Downloadable!] (restricted)
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