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Civil conflict, federalism and strategic delegation of leadership

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  • Jennings, Colin
  • Roelfsema, Hein

Abstract

This article analyzes negative externalities that policymakers in one region or group may impose upon the citizens of neighboring regions or groups. These externalities may be material, but they may also be psychological (in the form of envy). The latter form of externality may arise from the production of `conspicuous' public goods. As a result, decentralized provision of conspicuous public goods may be too high. Potentially, a centralized legislature may internalize negative externalities. However, in a model with strategic delegation, we argue that the median voter in each jurisdiction may anticipate a reduction in local public goods supply and delegate to a policymaker who cares more for public goods than she does herself. This last effect mitigates the expected benefits of policy centralization. The authors' theory is then applied to the setting of civil conflict, where they discuss electoral outcomes in Northern Ireland and Yugoslavia before and after significant institutional changes that affected the degree of centralization. These case studies provide support for the authors' theoretical predictions.

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Paper provided by Scottish Institute for Research in Economics (SIRE) in its series SIRE Discussion Papers with number 2008-16.

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Date of creation: 2008
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Handle: RePEc:edn:sirdps:29

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  1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 817-868, August.
  2. R Dur & H.J. Roelfsema, 2004. "Why does centralisation fail to internalise policy externalities?," Working Papers 04-09, Utrecht School of Economics.
  3. Gali, Jordi, 1994. "Keeping Up with the Joneses: Consumption Externalities, Portfolio Choice, and Asset Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(1), pages 1-8, February.
  4. Besley, Timothy & Coate, Stephen, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 85-114, February.
  5. Konrad, Kai A. & Lommerud, Kjell Erik, 1993. "Relative standing comparisons, risk taking, and safety regulations," Journal of Public Economics, Elsevier, vol. 51(3), pages 345-358, July.
  6. Yeung Lewis Chan & Leonid Kogan, 2002. "Catching Up with the Joneses: Heterogeneous Preferences and the Dynamics of Asset Prices," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1255-1285, December.
  7. Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
  8. A. Abel, 2010. "Asset prices under habit formation and catching up with the Jones," Levine's Working Paper Archive 1395, David K. Levine.
  9. Collier, Paul & Hoeffler, Anke, 2000. "Greed and grievance in civil war," Policy Research Working Paper Series 2355, The World Bank.
  10. Jennings, Colin, 2007. "Political leadership, conflict, and the prospects for constitutional peace," Policy Research Working Paper Series 4196, The World Bank.
  11. Edward L. Glaeser, 2002. "The Political Economy of Hatred," NBER Working Papers 9171, National Bureau of Economic Research, Inc.
  12. Lommerud, Kjell Erik, 1989. "Educational Subsidies When Relative Income Matters," Oxford Economic Papers, Oxford University Press, vol. 41(3), pages 640-52, July.
  13. Colin Jennings & Alan Hamlin, 2004. "Leadership and Conflict," Economics Series Working Papers 200, University of Oxford, Department of Economics.
  14. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  15. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  16. Bill Dupor & Wen-Fang Liu, 2003. "Jealousy and Equilibrium Overconsumption," American Economic Review, American Economic Association, vol. 93(1), pages 423-428, March.
  17. Paul Collier & Dominic Rohner, 2008. "Democracy, Development, and Conflict," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 531-540, 04-05.
  18. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
  19. Marta Reynal-Querol, 2002. "Political systems, stability and civil wars," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(6), pages 465-483.
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Cited by:
  1. Colin Jennings, 2008. "Intra-Group Competition and Inter-Group Conflict: An Application to Northern Ireland," Working Papers 0809, University of Strathclyde Business School, Department of Economics.
  2. Stefan Brandauer & Florian Englmaier, 2009. "A model of strategic delegation in contests between groups," Review of Economic Design, Springer, vol. 13(3), pages 205-232, September.
  3. R. Emre Aytimur & Aristotelis Boukouras & Robert Schwager, 2012. "The Citizen-Candidate Model with Imperfect Policy Control," CESifo Working Paper Series 3900, CESifo Group Munich.

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