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An Enabling Mechanism for the Creation, Adjustment, and Dissolution of States and Governmental Units

  • Kjell Hausken

    (University of Stavanger)

  • John F. Knutsen

    (Knutsen & Didriksen as)

The article proposes an enabling mechanism for the creation, adjustment and dissolution of governmental units, giving autonomy to each resident as in a direct democracy. Rather than focusing on a narrow model with restrictive and specialized assumptions, and subsequent solutions, as has been common in the literature, the article takes individuals seriously acknowledging that they are best equipped to find their own solutions. The emphasis is on the practical approach of how individuals discover and implement their subjective preferences and how this discovery and implementation process can be facilitated and corresponding costs lowered. Governmental units are subjected to some of the same market forces as ordinary firms, in the spirit of Coase (1988a). This brings the interaction between governmental units closer to a market structure, and serves to eliminate or reduce many of the coercive elements of government.

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Paper provided by EconWPA in its series Public Economics with number 0409011.

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Length: 31 pages
Date of creation: 22 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0409011
Note: Type of Document - pdf; pages: 31. 31 pages pdf file
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  13. Bolton, Patrick & Roland, Gerard, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1057-90, November.
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  19. Alessandra Casella, 2000. "Market Mechanisms for Policy Decisions: Tools for the European Union," NBER Working Papers 8027, National Bureau of Economic Research, Inc.
  20. Kjell Hausken, 2005. "Production and Conflict Models Versus Rent-Seeking Models," Public Choice, Springer, vol. 123(1), pages 59-93, April.
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  25. Buchanan, James M & Faith, Roger L, 1987. "Secession and the Limits of Taxation: Toward a Theory of Internal Exit," American Economic Review, American Economic Association, vol. 77(5), pages 1023-31, December.
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