Public Goods and the Dissolution of States
20 Pages Posted: 4 Jul 2017
Date Written: July 2017
We present a simple model of the dissolution of states. We combine elements of the literature on the break‐up and integration of states based on models in the fiscal federalism tradition, with elements of the literature that explains the determination of a state's political institutions as a means to credibly promise redistributions in the face of costly, perhaps violent, redistributive conflict. We are able to characterize when the equilibrium involves the dissolution of a country, and when it involves continued unity. We are also able to explore some aspects of the linkages between political institutions and the determination of national boundaries.
Keywords: dissolution of states, fiscal federalism, redistribution conflict
JEL Classification: D02, D77, H22
Suggested Citation: Suggested Citation