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Democracy, collective action and intra-elite conflict

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  • Ghosal, Sayantan
  • Proto, Eugenio

Abstract

We analyze a model where there is uncertainty about the future power of two ex-ante symmetric elites to appropriate surplus, and ex-ante surplus sharing agreements are not binding. We show that in an oligarchy, the stronger elite appropriates the entire available surplus, whereas a democracy results in a more balanced surplus allocation between the two elites. In a democracy, the newly enfranchised non-elite organize to act collectively, so that the weaker elite can credibly threaten to form a coalition with the organized non-elite against the stronger elite. Such a threat ensures that the more balanced surplus sharing proposal chosen by majority voting is renegotiation-proof. Therefore, sufficiently risk-averse elites unanimously choose democracy as a form of insurance against future imbalances in relative power. We emphasize that franchise extension to, and low cost of organizing collective political activity for, the non-elite are both necessary features of a democracy. Our formal analysis can account for the stylized facts that emerge from a comparative analysis of Indian and Western European democracies.

Suggested Citation

  • Ghosal, Sayantan & Proto, Eugenio, 2009. "Democracy, collective action and intra-elite conflict," Journal of Public Economics, Elsevier, vol. 93(9-10), pages 1078-1089, October.
  • Handle: RePEc:eee:pubeco:v:93:y:2009:i:9-10:p:1078-1089
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    1. Ghosal, Sayantan & Proto, Eugenio, 2009. "Democracy, collective action and intra-elite conflict," Journal of Public Economics, Elsevier, pages 1078-1089.
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    Cited by:

    1. Ghosal, Sayantan & Proto, Eugenio, 2009. "Democracy, collective action and intra-elite conflict," Journal of Public Economics, Elsevier, pages 1078-1089.
    2. Campos, Nauro F & Coricelli, Fabrizio, 2009. "Financial liberalization and democracy: The role of reform reversals," CEPR Discussion Papers 7393, C.E.P.R. Discussion Papers.
    3. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2014. "Violence during democratization and the quality of democratic institutions," European Economic Review, Elsevier, vol. 66(C), pages 226-247.
    4. Nauro Campos & Fabrizio Coricelli, 2010. "Financial Liberalization, Elite Heterogeneity and Political Reform," PSE - G-MOND WORKING PAPERS halshs-00967428, HAL.
    5. Pellicer, Miquel, 2009. "Inequality persistence through vertical vs. horizontal coalitions," Journal of Development Economics, Elsevier, vol. 90(2), pages 258-266, November.
    6. Galiani, Sebastian & Torrens, Gustavo, 2014. "Autocracy, democracy and trade policy," Journal of International Economics, Elsevier, pages 173-193.
    7. Francisco Pino & Jordi Vidal-Robert, 2014. "Habemus Papam ?Polarization and Conflict in the Papal States," Working Papers ECARES ECARES 2014-27, ULB -- Universite Libre de Bruxelles.
    8. repec:hal:pseose:halshs-00967428 is not listed on IDEAS

    More about this item

    Keywords

    Democracy Conflict Collective action Coalition formation Party formation Bargaining Risk-sharing;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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