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The emergence and persistence of oligarchy: A dynamic model of endogenous political power

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  • Jeon, Jee Seon
  • Hwang, Ilwoo

Abstract

We study an infinite-horizon multilateral bargaining game in which the status quo policy, players' recognition probabilities, and their voting weights are endogenously determined by the previous bargaining outcome. With players not discounting future payoffs, we show that the long-run equilibrium outcome features the concentration of power by one or two players, depending on the initial bargaining state. If the players' initial shares are relatively equal, they successfully prevent tyranny, but a two-player oligarchy nevertheless emerges and persists. The same results are obtained with payoff discounting, provided that the players' shares are not too small. Our results highlight the importance of the initial power distribution and discounting of future payoffs in the long-run development of power configuration.

Suggested Citation

  • Jeon, Jee Seon & Hwang, Ilwoo, 2022. "The emergence and persistence of oligarchy: A dynamic model of endogenous political power," Journal of Economic Theory, Elsevier, vol. 201(C).
    • Handle: RePEc:eee:jetheo:v:201:y:2022:i:c:s0022053122000278
    DOI: 10.1016/j.jet.2022.105437
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    Cited by:

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    2. Seok-ju Cho, 2023. "The Dynamics of Parliamentary Bargaining and the Vote of Confidence," Korean Economic Review, Korean Economic Association, vol. 39, pages 277-314.

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    More about this item

    Keywords

    Dynamic bargaining; Endogenous political power; Endogenous institution; Markov perfect equilibrium; Oligarchy;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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