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The Market for Protection and the Origin of the State

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  • Konrad, Kai A.
  • Skaperdas, Stergios

Abstract

We examine a stark setting in which security or protection can be provided by self-governing groups of by for-profit entrepreneurs: kings, lords, or mafia dons. Though self-governance is best for the population, it faces problems of long-term viability. Typically, in providing security the stable market structure involves competing lords, a condition that leads to a tragedy of coercion: all the savings from the provision of collective protection are dissipated and welfare can be as low or lower than in the absence of a state.

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  • Konrad, Kai A. & Skaperdas, Stergios, 1999. "The Market for Protection and the Origin of the State," CEPR Discussion Papers 2173, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2173
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    More about this item

    Keywords

    Governance; Origin of State; Protection; Security;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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