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The survival and demise of the state: a dynamic theory of secessions

AuthorsEsteban, Joan CSIC ORCID ; Flamand, Sabine CSIC ORCID; Morelli, Massimo; Rohner, Dominic
Repeated Stackelberg Game
Issue Date19-Mar-2018
PublisherBarcelona Graduate School of Economics
CitationBarcelona GSE Working Paper Series (1028): (2018)
AbstractThis paper analizes the repeated interaction between groups in a country as a repeated Stackelberg game, where conflict and secession can occur on the equilibrium path owing to commitment problems. If a group out of power is small enough and its contribution to total surplus not too large, then the group in power can always maintain peace with an acceptable offer of surplus sharing for every period. When there is a mismatch between the relative size and the relative surplus contribution of the minority group, conflict can occur. While in the static model secession can occur only as a peaceful outcome, in the infinite horizon game with high discount factor secession may result following costly conflict. We discuss our full characterization of equilibrium outcomes in the light of the available empirical evidence.
Publisher version (URL)https://www.barcelonagse.eu/research/working-papers/survival-and-demise-state-dynamic-theory-secession
Appears in Collections:(IAE) Informes y documentos de trabajo
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