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The Political Economy of Regionalism

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  • Sanjeev Goyal

    (Econometric Institute, Erasmus University Rotterdam)

  • Klaas Staal

    (Econometric Institute, Erasmus University Rotterdam)

Abstract

We examine the incentives of regions in a country to unite or toseparate. We find that smaller regions have greater incentives tounite, relative to larger regions. We show, however, that on thewhole, majority voting on separation and union generates excessiveincentives to separate. This leads us to examine the scope ofalternative political institutions and rules in overcoming thepotential inefficiency. Our paper also provides a wide range ofexamples to illustrate the different institutions used in actualpractice to resolve such problems.

Suggested Citation

  • Sanjeev Goyal & Klaas Staal, 2000. "The Political Economy of Regionalism," Tinbergen Institute Discussion Papers 00-014/1, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20000014
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