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Negotiating constitution for political unions

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  • Vikas Kumar

    ()
    (Indira Gandhi Institute of Development Research)

Abstract

This paper provides a cradle-to-grave model for political union between two unequally endowed states. We introduce negotiated, contested, and time-consistent contested constitutions to address various classes of merger problems. Merger agreement is shown to be path dependent and, in some cases, time inconsistent. The possibility of contest constrains the set of mutually agreeable tax rates and provides stability to a constitution. Demographic heterogeneity constrains the set of mutually agreeable mergers. Rent extracted by technologically advanced province for transferring technology to the backward province in a union is shown to be increasing in complexity of technology but bounded from above. The model can also support the possibility of historical cycles of political geography. The main contribution of this paper is to highlight the role of technology gap and unequal distribution of resources in all the above cases.

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Bibliographic Info

Paper provided by Indira Gandhi Institute of Development Research, Mumbai, India in its series Indira Gandhi Institute of Development Research, Mumbai Working Papers with number 2008-026.

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Length: 58 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:ind:igiwpp:2008-026

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Keywords: Bargaining; Constitution; Contest; Political Union;

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References

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  1. Bordignon, Massimo & Brusco, Sandro, 1999. "Optimal secession rules," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 99-51, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Busch, L-A. & Wen, Q., 1991. "Perfect Equilibria in a Negotiation Model," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers, University of Western Ontario, The Centre for the Study of International Economic Relations 9108, University of Western Ontario, The Centre for the Study of International Economic Relations.
  3. Herschel I. Grossman, 2002. "Constitution or Conflict?," NBER Working Papers 8733, National Bureau of Economic Research, Inc.
  4. Hart, Oliver D & Moore, John, 1988. "Incomplete Contracts and Renegotiation," Econometrica, Econometric Society, Econometric Society, vol. 56(4), pages 755-85, July.
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  6. Stergios Skaperdas, 2006. "Bargaining Versus Fighting," Working Papers, University of California-Irvine, Department of Economics 060705, University of California-Irvine, Department of Economics.
  7. Bulow, Jeremy & Rogoff, Kenneth, 1989. "A Constant Recontracting Model of Sovereign Debt," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(1), pages 155-78, February.
  8. Chang Roberto, 1995. "Bargaining a Monetary Union," Journal of Economic Theory, Elsevier, Elsevier, vol. 66(1), pages 89-112, June.
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  10. Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, Cambridge University Press, vol. 42(03), pages 427-460, June.
  11. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  12. Vikas Kumar, 2008. "Negotiating constitution for political unions," Indira Gandhi Institute of Development Research, Mumbai Working Papers, Indira Gandhi Institute of Development Research, Mumbai, India 2008-026, Indira Gandhi Institute of Development Research, Mumbai, India.
  13. repec:cup:cbooks:9780521855266 is not listed on IDEAS
  14. Fershtman, Chaim, 1990. "The importance of the agenda in bargaining," Games and Economic Behavior, Elsevier, Elsevier, vol. 2(3), pages 224-238, September.
  15. Bulow, Jeremy & Rogoff, Kenneth S., 1989. "A Constant Recontracting Model of Sovereign Debt," Scholarly Articles 12491028, Harvard University Department of Economics.
  16. Anbarci, N. & Skaperdas, S. & Syropoulos, C., 2000. "Comparing Bargaining Solutions in the Shadow of Conflict: How Norms Against Threats Can Have Real Effects," Papers, California Irvine - School of Social Sciences 00-01-19, California Irvine - School of Social Sciences.
  17. Robert P. Inman & Daniel L. Rubinfeld, 2008. "Federal Institutions and the Democratic Transition: Learning from South Africa," NBER Working Papers 13733, National Bureau of Economic Research, Inc.
  18. Ludwig van den Hauwe, 2005. "Constitutional economics," Public Economics, EconWPA 0508010, EconWPA, revised 19 Aug 2005.
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Cited by:
  1. Vikas Kumar, 2008. "Negotiating Constitution for Political Unions," Microeconomics Working Papers 22386, East Asian Bureau of Economic Research.

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