The Rawlsian principle and secession-proofness in large heterogeneous societies
This paper examines a model of multi-jurisdictional formation considered by Alesina and Spolaore (1997) and Le Breton and Weber (2003), where the distribution of individuals is given by Lebesgue measure over the (finite or infinite) interval. Every jurisdiction chooses a location of a public good and shares the cost of production among its residents. Each individual covers transportation cost to the location of the public good, and contributes towards the production of the public good. We consider a notion of a secession-proof allocation where no group of individuals can make all its members better off by choosing both a location of the public good and a cost-sharing mechanism among its own members. We show that if the society's population is distributed over the real line , the only secession-proof allocation is Rawlsian, which equalizes the utilities of all individuals in the society. In the case of bounded support, we show that there is a degree of approximation to the Rawlsian solution that reconciles the secession-proofness and the weakened Rawlsian principle.
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- 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.
- Alberto Alesina & Enrico Spolaore, 1995.
"On the Number and Size of Nations,"
NBER Working Papers
5050, National Bureau of Economic Research, Inc.
- Michel Le Breton & Shlomo Weber, 2003. "The Art of Making Everybody Happy: How to Prevent a Secession," IMF Staff Papers, Palgrave Macmillan, vol. 50(3), pages 4.
- Haimanko, Ori & Le Breton, Michel & Weber, Shlomo, 2004. "Voluntary formation of communities for the provision of public projects," Journal of Economic Theory, Elsevier, vol. 115(1), pages 1-34, March.
- Mark Pauly, 1970. "Cores and clubs," Public Choice, Springer, vol. 9(1), pages 53-65, September.
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