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The Art of Making Everybody Happy : How to Prevent a Secession

Listed author(s):
  • Le Breton, Michel
  • Weber, Shlomo

In this paper we examine compensation schemes that prevent a threat of secession by any of a country's regions. We prove that, under quite general assumptions on the distribution of citizens' preferences, there exist transfer schemes that are secession-proof. Moreover, we show that these compensation schemes entail a degree of partial equalization among regions: the gap between advantaged regions and disadvantaged regions has to be reduced but it should never be completely eliminated. We demonstrate that in the case of a uniform distribution of the nation's citizens, the secession-proof conditions generate the 50 percent compensation rule for disadvantaged regions. Copyright 2003, International Monetary Fund

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Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 164.

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Date of creation: 2003
Publication status: Published in IMF Staff Papers, n°01/176, novembre 2001. IMF Staff Papers, vol. 50, 2003, p. 403-435.
Handle: RePEc:ide:wpaper:569
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