Alexei Savvateev (New Economic School) Michel Le Breton (Universitè de Toulouse I, GREMAQ and IDEI) Valery Makarov (Central Economics and Mathematics Institute and New Economic School) Shlomo Weber (Southern Methodist University and CEPR)
Abstract
We consider a model of the “world" with several regions that may create a unified entity or be partitioned into several unions (countries). The regions have distinct preferences over policies chosen in the country to which they belong and equally share the cost of public policies. It is known that stable \political maps" or country partitions, that do not admit a threat of secession by any group of regions, may fail to exist. To rectify this problem, in line with the recent trend for an increased autonomy and various regional arrangements, we consider federal structures, where a region can simultaneously be a part of several unions. We show that, under very general conditions, there always exists a stable federal structure.
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Publisher Info
Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number
2008.41.
Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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