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The Emergence and Persistence of Oligarchy: A Dynamic Model of Endogenous Political Power

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  • Ilwoo Hwang
  • Jee Seon Jeon

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.

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  • Ilwoo Hwang & Jee Seon Jeon, 2021. "The Emergence and Persistence of Oligarchy: A Dynamic Model of Endogenous Political Power," Working Paper Series no145, Institute of Economic Research, Seoul National University.
    • Handle: RePEc:snu:ioerwp:no145
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    Keywords

    Dynamic bargaining; Endogenous political power; Endogenous institution; Markov perfect equilibrium; Oligarchy;
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