Optimal Secession Rules

ZEW Discussion Paper No. 99-51

43 Pages Posted: 19 May 2003

See all articles by Massimo Bordignon

Massimo Bordignon

Universita Cattolica; CESifo (Center for Economic Studies and Ifo Institute)

Sandro Brusco

SUNY at Stony Brook University, College of Arts and Science, Department of Economics

Date Written: 1999

Abstract

Should the constitution of a federation allow for peaceful secession? Constitutionally defined secession rules are optimal ex post if the federation breaks down. However, they may be suboptimal ex ante if the member countries receive a benefit from the perceived long-term stability of the federation and constitutionally defined secession rules increase the probability of a break-up. The optimal social contract trades off ex ante benefits and ex post losses renegotiation is allowed. Finally, we show that under asymmetric information it is more difficult to keep the federation together and that a secession war may occur.

Suggested Citation

Bordignon, Massimo and Brusco, Sandro, Optimal Secession Rules (1999). ZEW Discussion Paper No. 99-51, Available at SSRN: https://ssrn.com/abstract=376206 or http://dx.doi.org/10.2139/ssrn.376206

Massimo Bordignon (Contact Author)

Universita Cattolica ( email )

20123 Milano
Italy
+39-2-5836-3300/1 (Phone)
+39-2-5836-3302 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Sandro Brusco

SUNY at Stony Brook University, College of Arts and Science, Department of Economics ( email )

Stony Brook, NY 11794
United States

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