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Formation of Nations in a Welfare State Minded World

  • Nir Dagan

    (Department of Economics, Universitat Pompeu Fabra)

  • Oscar Volij

    (Department of Economics, Brown University, and Department of Economics, Hebrew University of Jerusalem.)

We model the endogenous formation of nations in a world economy where nations apply redistributive policies. We show that stronger distributive policies may lead to greater inequality in the world's distribution of income as a result of rich individuals tending to form their own nations. By the same token, stable economic integration occurs only when redistributive policies are not too strong.

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Paper provided by Oscar Volij in its series Economic theory and game theory with number 002.

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Length: 20 pages
Date of creation: 1995
Date of revision: Aug 1999
Publication status: Published in Journal of Public Economic Theory 2:157-181 (2000)
Handle: RePEc:nid:ovolij:002
Contact details of provider: Postal: Oscar Volij, Department of Economics, Ben-Gurion University, Beer-Sheva 84105, Israel
Web page: http://volij.co.il/

Order Information: Web: http://volij.co.il/addr.html

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  1. Harold L Cole & Edward C Prescott, 1997. "Valuation equilibrium with Clubs," Levine's Working Paper Archive 912, David K. Levine.
  2. Myers & G.M., 1989. "Optimality, Free Mobility And The Regional Authority In Federation," Working Papers 10, John Deutsch Institute for the Study of Economic Policy.
  3. Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
  4. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
  5. Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-40, May.
  6. Alex Cukierman & Zvi Hercowitz & David Pines, 1994. "The Political Economy of Immigration," Public Economics 9405002, EconWPA.
  7. Razin, Assaf & Sadka, Efraim, 1995. "Resisting Migration: Wage Rigidity and Income Distribution," American Economic Review, American Economic Association, vol. 85(2), pages 312-16, May.
  8. Bennett, Elaine & Wooders, Myrna, 1979. "Income distribution and firm formation," Journal of Comparative Economics, Elsevier, vol. 3(3), pages 304-317, September.
  9. Hercowitz, Z. & Pines, D., 1991. "Migration with Fiscal Externalities," Papers 9-91, Tel Aviv.
  10. Benabou, Roland, 1993. "Workings of a City: Location, Education, and Production," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 619-52, August.
  11. Alberto Alesina & Enrico Spolaore, 1995. "On the Number and Size of Nations," NBER Working Papers 5050, National Bureau of Economic Research, Inc.
  12. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
  13. Conley, John P. & Wooders, Myrna H., 1997. "Equivalence of the Core and Competitive Equilibrium in a Tiebout Economy with Crowding Types," Journal of Urban Economics, Elsevier, vol. 41(3), pages 421-440, May.
  14. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  15. Westhoff, Frank, 1977. "Existence of equilibria in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 14(1), pages 84-112, February.
  16. Guesnerie Roger & Oddou Claude, 1979. "Second best taxation as a game," CEPREMAP Working Papers (Couverture Orange) 7919, CEPREMAP.
  17. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
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