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Political Economy in a Changing World

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  • Daron Acemoglu
  • Georgy Egorov
  • Konstantin Sonin

Abstract

We provide a general framework for the analysis of the dynamics of institutional change (e.g., democratization, extension of political rights or repression of different groups), and how these dynamics interact with (anticipated and unanticipated) changes in the distribution of political power and in economic structure. We focus on the Markov Voting Equilibria, which require that economic and political changes should take place if there exists a subset of players with the power to implement such changes and who will obtain higher expected discounted utility by doing so. Assuming that economic and political institutions as well as individual types can be ordered, and preferences and the distribution of political power satisfy natural “single crossing” (increasing differences) conditions, we prove the existence of a pure-strategy equilibrium, provide conditions for its uniqueness, and present a number of comparative static results that apply at this level of generality. We then use this framework to study the dynamics of political rights and repression in the presence of radical groups that can stochastically grab power. We characterize the conditions under which the presence of radicals leads to repression (of less radical groups), show a type of path dependence in politics resulting from radicals coming to power, and identify a novel strategic complementarity in repression.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19158.

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Date of creation: Jun 2013
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Handle: RePEc:nbr:nberwo:19158

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References

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  1. Salvador Barberà & Michael Maschler & Jonathan Shalev, 1998. "Voting for Voters: A Model of Electoral Evolution," Game Theory and Information, EconWPA 9804001, EconWPA.
  2. Etro, Federico & Ageloni, Ignazio & Alesina, Alberto, 2005. "International Unions," Scholarly Articles 4553008, Harvard University Department of Economics.
  3. Roger Lagunoff & William Jack, 2004. "Dynamic Enfranchisement," Econometric Society 2004 North American Summer Meetings 24, Econometric Society.
  4. Besley, Timothy & Coate, Stephen, 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis," American Economic Review, American Economic Association, vol. 88(1), pages 139-56, March.
  5. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2010. "Political Selection and Persistence of Bad Governments," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(4), pages 1511-1575, November.
  6. Salvador Barberà & Matthew O. Jackson, 2000. "Choosing How to Choose: Self-Stable Majority Rules and Constitutions," Working Papers 57, Barcelona Graduate School of Economics.
  7. Gregory, Paul R. & Schröder, Philipp J.H. & Sonin, Konstantin, 2011. "Rational dictators and the killing of innocents: Data from Stalin's archives," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 34-42, March.
  8. Burkart, Mike & Wallner, Klaus, 2000. "Club Enlargement: Early Versus Late Admittance," CEPR Discussion Papers 2600, C.E.P.R. Discussion Papers.
  9. Jack Hirshleifer & Michele Boldrin & David K Levine, 2009. "The Slippery Slope Of Concession," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 197-205, 04.
  10. Matthias Messner & Mattias K. Polborn, 2004. "Voting on Majority Rules," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 115-132.
  11. Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, Cambridge University Press, vol. 60(01), pages 169-203, January.
  12. Bruno Strulovici, 2010. "Learning While Voting: Determinants of Collective Experimentation," Econometrica, Econometric Society, Econometric Society, vol. 78(3), pages 933-971, 05.
  13. repec:cup:cbooks:9780521855266 is not listed on IDEAS
  14. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2008. "Coalition Formation in Non-Democracies," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 987-1009.
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