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The Market for Protection and the Origin of the State

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  • Konrad, Kai A
  • Skaperdas, Stergios

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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2173.

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Date of creation: Jun 1999
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Handle: RePEc:cpr:ceprdp:2173

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Keywords: Governance; Origin of State; Protection; Security;

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