The Economics of Political Borders

35 Pages Posted: 30 Jun 2012

See all articles by Enrico Spolaore

Enrico Spolaore

Tufts University - Department of Economics

Date Written: June 28, 2012


This paper presents concepts from economic analysis that shed light on the formation and breakup of sovereign states. First, we discuss the key trade-off between economies of scale in the provision of public goods and political costs from heterogeneity of preferences. Second, we present four economic perspectives on the formation of borders: efficient borders, borders as democratic outcomes, borders in a world of rent-seeking Leviathans, and borders as outcomes of conflict and wars. Finally, we provide an analytical illustration of the basic ideas within a simple framework.

Keywords: economies of scale, heterogeneity costs, conflict, size of nations

JEL Classification: N410

Suggested Citation

Spolaore, Enrico, The Economics of Political Borders (June 28, 2012). CESifo Working Paper Series No. 3854, Available at SSRN: or

Enrico Spolaore (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

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