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Optimal secession rules

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Author Info
Bordignon, Massimo
Brusco, Sandro

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Abstract

Should the constitution of a federation allow for peaceful secession? Constitutionally defined secession rules are optimal ex post if the federation breaks down. However, they may be suboptimal ex ante if the member countries receive a benefit from the perceived long-term stability of the federation and constitutionally defined secession rules increase the probability of a break-up. The optimal social contract trades off ex ante benefits and ex post losses, and it may avoid explicit secession rules. If transfers are costly, the trade off is present even if ex post renegotiation is allowed. Finally, we show that under asymmetric information it is more difficult to keep the federation together and that a secession war may occur.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 99-51.

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Date of creation: 1999
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Handle: RePEc:zbw:zewdip:5264

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  1. Casella, Alessandra, 1992. "On Markets and Clubs: Economic and Political Integration of Regions with Unequal Productivity," American Economic Review, American Economic Association, vol. 82(2), pages 115-21, May. [Downloadable!] (restricted)
  2. Lockwood, Ben, 1999. "Inter-regional insurance," Journal of Public Economics, Elsevier, vol. 72(1), pages 1-37, April. [Downloadable!] (restricted)
  3. Torsten Persson & Guido Tabellini, 1999. "Political Economics and Public Finance," NBER Working Papers 7097, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Cornes, Richard C. & Silva, Emilson C. D., 2002. "Local public goods, inter-regional transfers and private information," European Economic Review, Elsevier, vol. 46(2), pages 329-356, February. [Downloadable!] (restricted)
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  5. 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. [Downloadable!] (restricted)
  6. Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 979-1009, October. [Downloadable!] (restricted)
  7. Buchanan, James M & Faith, Roger L, 1987. "Secession and the Limits of Taxation: Toward a Theory of Internal Exit," American Economic Review, American Economic Association, vol. 77(5), pages 1023-31, December. [Downloadable!] (restricted)
  8. Bordignon, Massimo & Manasse, Paolo & Tabellini, Guido, 1996. "Optimal Regional Redistribution Under Asymmetric Information," CEPR Discussion Papers 1437, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
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  10. Alberto Alesina & Enrico Spolaore & Romain Wacziarg, 1997. "Economic Integration and Political Disintegration," NBER Working Papers 6163, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Alesina, Alberto & Perotti, Roberto & Spolaore, Enrico, 1995. "Togetheror separately? Issues on the costs and benefits of political and fiscal unions," European Economic Review, Elsevier, vol. 39(3-4), pages 751-758, April. [Downloadable!] (restricted)
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  1. Gradstein, Mark, 2004. "Political Bargaining in a Federation: Buchanan meets Coase," CEPR Discussion Papers 4188, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Le Breton, Michel & Weber, Shlomo, 2003. "The Art of Making Everybody Happy : How to Prevent a Secession," IDEI Working Papers 164, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  3. Herschel I. Grossman, 2003. ". . . and six hundred thousand men were dead," NBER Working Papers 9793, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. BRETON, Albert & SALMON, Pierre, 2002. "Constitutional rules and competitive politics : their effects on secessionism," LATEC - Document de travail - Economie (1991-2003) 2002-06, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne. [Downloadable!]
  5. Essi Eerola & Niku Määttänen & Panu Poutvaara, 2004. "Citizens Should Vote on Secession," Discussion Papers 939, The Research Institute of the Finnish Economy. [Downloadable!]
  6. Enrico Spolaore, 2008. "Civil conflict and secessions," Economics of Governance, Springer, vol. 9(1), pages 45-63, January. [Downloadable!] (restricted)
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  7. Kjell Hausken & John F. Knutsen, 2002. "The Birth, Adjustment and Death of States," Public Economics 0205004, EconWPA. [Downloadable!]
  8. LE BRETON, Michel & WEBER, Shlomo, 2001. "The art of making everybody happy: how to prevent a secession," CORE Discussion Papers 2001011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  9. Shlomo Weber & Michel Le Breton, 2001. "The Art of Making Everybody Happy: How to Prevent a Secession," IMF Working Papers 01/176, International Monetary Fund. [Downloadable!]
  10. Antonio Nicolo' & Piero Tedeschi, 2004. "Missing Contracts: On the Rationality of not Signing a Prenuptial Agreement," Game Theory and Information 0406001, EconWPA. [Downloadable!]
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  11. Erik Berglöf & Mike Burkart & Guido Friebel & Elena Paltseva, 2009. "Club-in-the-Club: Reform under Unanimity," EPRU Working Paper Series 2009-07, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  12. Klaas Staal, 2004. "Country Size and Public Good Provision," Tinbergen Institute Discussion Papers 04-026/1, Tinbergen Institute. [Downloadable!]
  13. Kjell Hausken & John F. Knutsen, 2004. "An Enabling Mechanism for the Creation, Adjustment, and Dissolution of States and Governmental Units," Public Economics 0409011, EconWPA. [Downloadable!]
  14. Berglöf, Erik & Burkart, Mike & Friebel, Guido & Paltseva, Elena, 2008. "Widening and Deepening: Reforming the European Union," CEPR Discussion Papers 6672, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  15. Stegarescu, Dan, 2004. "Economic Integration and Fiscal Decentralization : Evidence from OECD Countries," ZEW Discussion Papers 04-86, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  16. K Staal, 2004. "Country size and public good provision," Econometric Society 2004 Australasian Meetings 156, Econometric Society. [Downloadable!]
  17. Gregoire Rota Graziosi, 2003. "The theory of `Internal Exit', a comment on Buchanan and Faith (1987)," Economics Bulletin, Economics Bulletin, vol. 8(12), pages 1-6. [Downloadable!]
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  18. Massimo Bordignon & Paolo Manasse & Guido Tabellini, 2001. "Optimal Regional Redistribution under Asymmetric Information," American Economic Review, American Economic Association, vol. 91(3), pages 709-723, June. [Downloadable!] (restricted)
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  19. repec:bep:eaptop:v:4:y:2004:i:1:p:1312-1312 is not listed on IDEAS
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  20. Klaas Staal, 2006. "Country size and publicly provided goods," Discussion Papers 187, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  21. Stefano Comino & Antonio Nicolò & Piero Tedeschi, 2005. "Termination Clauses in Partnerships," Industrial Organization 0509007, EconWPA. [Downloadable!]
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  22. Martin Kolmar, 2003. "Income Redistribution in an Economic Union: Does Asymmetric Information Legitimize Centralization?," Asia-Pacific Financial Markets, Springer, vol. 10(2), pages 169-186, March. [Downloadable!] (restricted)
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