IDEAS home Printed from https://ideas.repec.org/p/nid/ovolij/002.html
   My bibliography  Save this paper

Formation of Nations in a Welfare State Minded World

Author

Listed:
  • Nir Dagan

    (Department of Economics, Universitat Pompeu Fabra)

  • Oscar Volij

    (Department of Economics, Brown University, and Department of Economics, Hebrew University of Jerusalem.)

Abstract

We model the endogenous formation of nations in a world economy where nations apply redistributive policies. We show that stronger distributive policies may lead to greater inequality in the world's distribution of income as a result of rich individuals tending to form their own nations. By the same token, stable economic integration occurs only when redistributive policies are not too strong.

Suggested Citation

  • Nir Dagan & Oscar Volij, 1995. "Formation of Nations in a Welfare State Minded World," Economic theory and game theory 002, Oscar Volij, revised Aug 1999.
    • Handle: RePEc:nid:ovolij:002
    as

    Download full text from publisher

    File URL: https://www.nirdagan.com/research/200002/full.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alberto Alesina & Enrico Spolaore, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1027-1056.
    2. Guesnerie, Roger & Oddou, Claude, 1981. "Second best taxation as a game," Journal of Economic Theory, Elsevier, vol. 25(1), pages 67-91, August.
    3. Hercowitz, Zvi & Pines, David, 1991. "Migration with fiscal externalities," Journal of Public Economics, Elsevier, vol. 46(2), pages 163-180, November.
    4. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
    5. Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-740, May.
    6. Patrick Bolton & Gérard Roland, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1057-1090.
    7. Cukierman, Alex & Hercowitz, Zvi & Pines, David, 1993. "The Political Economy of Immigration," Foerder Institute for Economic Research Working Papers 275583, Tel-Aviv University > Foerder Institute for Economic Research.
    8. Conley, John P. & Wooders, Myrna H., 1997. "Equivalence of the Core and Competitive Equilibrium in a Tiebout Economy with Crowding Types," Journal of Urban Economics, Elsevier, vol. 41(3), pages 421-440, May.
    9. Westhoff, Frank, 1977. "Existence of equilibria in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 14(1), pages 84-112, February.
    10. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-774, September.
    11. Cole, Harold L. & Prescott, Edward C., 1997. "Valuation Equilibrium with Clubs," Journal of Economic Theory, Elsevier, vol. 74(1), pages 19-39, May.
    12. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    13. Bennett, Elaine & Wooders, Myrna, 1979. "Income distribution and firm formation," Journal of Comparative Economics, Elsevier, vol. 3(3), pages 304-317, September.
    14. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-858, August.
    15. Razin, Assaf & Sadka, Efraim, 1995. "Resisting Migration: Wage Rigidity and Income Distribution," American Economic Review, American Economic Association, vol. 85(2), pages 312-316, May.
    16. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
    17. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October.
    18. Roland Benabou, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 619-652.
    19. Kurz, Mordecai, 1994. "Game theory and public economics," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 33, pages 1153-1192, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Haimanko, Ori & Le Breton, Michel & Weber, Shlomo, 2005. "Transfers in a polarized country: bridging the gap between efficiency and stability," Journal of Public Economics, Elsevier, vol. 89(7), pages 1277-1303, July.
    2. Goyal, Sanjeev & Staal, Klaas, 2004. "The political economy of regionalism," European Economic Review, Elsevier, vol. 48(3), pages 563-593, June.
    3. T. Kämpke & R. Pestel & F.J. Radermacher, 2003. "A Computational Concept for Normative Equity," European Journal of Law and Economics, Springer, vol. 15(2), pages 129-163, March.
    4. Vanschoonbeek, Jakob, 2020. "Regional (in)stability in Europe a quantitative model of state fragmentation," Journal of Comparative Economics, Elsevier, vol. 48(3), pages 605-641.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John P. Conley & Myrna Holtz Wooders, 1998. "The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibrium," Working Papers mwooders-98-06, University of Toronto, Department of Economics.
    2. Allouch, Nizar & Conley, John P. & Wooders, Myrna, 2009. "Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 492-510, September.
    3. Conley, John P. & Konishi, Hideo, 2002. "Migration-proof Tiebout equilibrium: existence and asymptotic efficiency," Journal of Public Economics, Elsevier, vol. 86(2), pages 243-262, November.
    4. Ellickson, Bryan & Grodal, Birgit & Scotchmer, Suzanne & Zame, William R., 2001. "Clubs and the Market: Large Finite Economies," Journal of Economic Theory, Elsevier, vol. 101(1), pages 40-77, November.
    5. Gabrielle Demange, 2017. "The stability of group formation," Revue d'économie politique, Dalloz, vol. 127(4), pages 495-516.
    6. Bolton, Patrick & Roland, Gerard & Spolaore, Enrico, 1996. "Economic theories of the break-up and integration of nations," European Economic Review, Elsevier, vol. 40(3-5), pages 697-705, April.
    7. Fan-chin Kung, 2005. "Formation of Collective Decision-Making Units: Stability and a Solution," Game Theory and Information 0505002, University Library of Munich, Germany, revised 21 Jun 2005.
    8. Musatov, D. & Savvateev, A., 2022. "Mathematical models of stable jurisdiction partitions: A survey of results and new directions," Journal of the New Economic Association, New Economic Association, vol. 54(2), pages 12-38.
    9. Nizar Allouch & John P. Conley & Myrna Wooders, 2006. "Anonymous Price Taking Equilibrium in Tiebout Economies with Unbounded Club Sizes," Working Papers 556, Queen Mary University of London, School of Economics and Finance.
    10. Jean-Marc Bourgeon & Marie-Laure Breuillé, 2023. "Citizen preferences and the architecture of government," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 61(3), pages 537-585, October.
    11. Dokow, Elad & Luque, Jaime, 2019. "Provision of local public goods in mixed income communities," Journal of Housing Economics, Elsevier, vol. 45(C), pages 1-1.
    12. Philippe Jehiel & Laurent Lamy, 2018. "A Mechanism Design Approach to the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 735-760.
    13. Calabrese, Stephen & Epple, Dennis & Romano, Richard, 2023. "Majority choice of taxation and redistribution in a federation," Journal of Public Economics, Elsevier, vol. 217(C).
    14. Nizar Allouch & Myrna Wooders, 2004. "Price Taking Equilibrium in Club Economies with Multiple Memberships and Unbounded Club Sizes," Working Papers 513, Queen Mary University of London, School of Economics and Finance.
    15. Morelli, Massimo & Park, In-Uck, 2016. "Internal hierarchy and stable coalition structures," Games and Economic Behavior, Elsevier, vol. 96(C), pages 90-96.
    16. Luque, Jaime, 2013. "Heterogeneous Tiebout communities with private production and anonymous crowding," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 117-123.
    17. Alexander Kovalenkov & Myrna Wooders, 2003. "Advances in the theory of large cooperative games and applications to club theory; the side payments case," Chapters, in: Carlo Carraro (ed.), The Endogenous Formation of Economic Coalitions, chapter 1, Edward Elgar Publishing.
    18. Gravel, Nicolas & Thoron, Sylvie, 2007. "Does endogenous formation of jurisdictions lead to wealth-stratification?," Journal of Economic Theory, Elsevier, vol. 132(1), pages 569-583, January.
    19. Nizar Allouch & John P. Conley & Myrna Wooders, 2006. "Anonymous Price Taking Equilibrium in Tiebout Economies with Unbounded Club Sizes," Working Papers 556, Queen Mary University of London, School of Economics and Finance.
    20. Guillaume Haeringer, 2000. "Stable Coalition Structures with Common Decision Scheme," Econometric Society World Congress 2000 Contributed Papers 1077, Econometric Society.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nid:ovolij:002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oscar Volij (email available below). General contact details of provider: http://volij.co.il/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.