Bulletin n. 1/2017 | ||
June 2017 | ||
Christopher J. Ellis |
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Dynamic dissolutions and unifications | ||
in Journal of Public Economic Theory , Volume 19, Issue 3 , 2017 , 692-712 | ||
I reexamine the key results from the literature on the size and number of countries under different political institutions in a simple dynamic model. I find that the canonical static results that democracies lead to too many too-small countries and that Leviathans lead to too few too-large countries no longer necessarily hold. The key dynamic element that drives the new results is that public goods are modeled as public capital; this changes the incentives to unify or divide countries. I also show that there are hysteresis effects on the size and number of countries; that is, arbitrary initial configurations of national boundaries may tend to persist because of the initial public capital location decisions they promote. | ||