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The art of making everybody happy: how to prevent a secession

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  • LE BRETON, Michel
  • WEBER, Shlomo
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    Abstract

    In this paper we examine compensation schemes that prevent a threat of secession by all country's regions and in the same time provide no incentives for citizens' migration within the country. We prove that, under quite general assumptions on the distribution of citizens' preferences, there exist transfer schemes that are both secession-proof and migration-proof. Moreover, we show that these compensation schemes entail a degree of partial equalization among the regions: the gap between advantageous regions has to be reduced but it should never be completely eliminated. We demonstrate that in the case of a uniform distribution of the nation citizens', the secession-proof and migration-proof conditions generate the 50% compensation rule for disadvantageous regions.

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    Bibliographic Info

    Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001011.

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    Date of creation: 00 Mar 2001
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    Handle: RePEc:cor:louvco:2001011

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    Related research

    Keywords: transfer schemes; secession; migration; efficiency; stability;

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    References

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    1. Alessandra Casella & Jonathan S. Feinstein, 1990. "Public Goods in Trade: On the Formation of Markets and Political Jurisdictions," NBER Working Papers 3554, National Bureau of Economic Research, Inc.
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    6. Bolton, Patrick & Roland, Gerard & Spolaore, Enrico, 1996. "Economic theories of the break-up and integration of nations," European Economic Review, Elsevier, vol. 40(3-5), pages 697-705, April.
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    Cited by:
    1. Staal, Klaas, 2006. "Country size and publicly provided goods," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 187, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Alesina, Alberto & Spolaore, Enrico, 2005. "War, peace, and the size of countries," Journal of Public Economics, Elsevier, vol. 89(7), pages 1333-1354, July.
    3. K Staal, 2004. "Country size and public good provision," Econometric Society 2004 Australasian Meetings 156, Econometric Society.
    4. Jackson, M.O.Matthew O. & Nicolo, Antonio, 2004. "The strategy-proof provision of public goods under congestion and crowding preferences," Journal of Economic Theory, Elsevier, vol. 115(2), pages 278-308, April.
    5. Ehtisham Ahmad & Raju Jan Singh, 2003. "Political Economy of Oil-Revenue Sharing in a Developing Country," IMF Working Papers 03/16, International Monetary Fund.
    6. Klaas Staal, 2004. "Country Size and Public Good Provision," Tinbergen Institute Discussion Papers 04-026/1, Tinbergen Institute.
    7. Robert Dur & Klaas Staal, 2003. "National Interference in Local Public Good Provision," Tinbergen Institute Discussion Papers 03-074/1, Tinbergen Institute.
    8. Alessandra Casella, 2002. "Redistribution Policy: A European Model," NBER Working Papers 9258, National Bureau of Economic Research, Inc.
    9. Santiago Lago Peñas, 2002. "Nivelación interterritorial e ineficiencia de las decisiones presupuestarias: reflexiones para el caso español," Hacienda Pública Española, IEF, vol. 162(3), pages 79-100, ¨Septemb.

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