Advanced Search
MyIDEAS: Login

Endogenous Political Economy: On the Inevitability of Inefficiency under the Natural Resource Curse

Contents:

Author Info

  • Ana Fernandes

Abstract

This paper is a first step toward a more fundamental theory of political economy outcomes. We start from the fundamentals of the economy, given by preferences and technology; further, we specify all available technologies for the control of resources - such as armed forces or bribing. We model the interaction of agents in this economy as a game and examine all its equilibria. Equilibrium allocations must be such that individuals maximize their utility and that no group of individuals has the incentive to modify those allocations by (additional) usage of the technologies for the control of resources. The generality of our approach enables us to answer the question "Is there something about the nature of a country that makes inefficient equilibria inevitable?" We illustrate our approach by applying it to the natural resource curse. The model predicts that inefficient outcomes - in the form of either conflict or a deterrence army solution - will always occur as long as the value of natural resources to capture is positive and the opportunity cost of time - which partly determines soldiers' wages - is finite.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.vwl.unibe.ch/papers/dp/dp0802.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Universitaet Bern, Departement Volkswirtschaft in its series Diskussionsschriften with number dp0802.

as in new window
Length:
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:ube:dpvwib:dp0802

Contact details of provider:
Postal: Schanzeneckstr. 1, PF 8573, CH-3001 Bern
Phone: 0041 31 631 45 06
Fax: 41 31 631 37 83
Web page: http://www.vwi.unibe.ch/content/publikationen/index_eng.html
More information through EDIRC

Related research

Keywords: Endogenous political economy; conflict; deterrence; natural resource curse; inefficiency; general equilibrium;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Daron Acemoglu & Davide Ticchi & Andrea Vindigni, 2007. "Emergence and Persistence of Inefficient States," Working Papers 0705, CREI Università degli Studi Roma Tre, revised 2007.
  2. Gilles Saint-Paul, 2000. "The "New Political Economy": Recent Books by Allen Drazen and by Torsten Persson and Guido Tabellini," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 915-925, December.
  3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  4. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
  5. Kolmar, Martin, 2005. "The contribution of Herschel I. Grossman to political economy," European Journal of Political Economy, Elsevier, vol. 21(4), pages 802-814, December.
  6. Caselli, Francesco & Gennaioli, Nicola, 2007. "Economics and Politics of Alternative Institutional Reforms," CEPR Discussion Papers 6095, C.E.P.R. Discussion Papers.
  7. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ube:dpvwib:dp0802. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Silvia Glusstein-Gerber).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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