Staal, Klaas: The Political Economy of Regionalism
World Conference Econometric Society, 2000, Seattle

Sanjeev Goyal, Erasmus University Rotterdam
Klaas Staal, Erasmus University Rotterdam
The Political Economy of Regionalism
Session: C-1-14  Friday 11 August 2000  by Staal, Klaas
We examine the incentives of regions in a country to unite or to separate. We find that smaller regions have greater incentives to unite, relative to larger regions. We show, however, that on the whole, majority voting on separation and union generates excessive incentives to separate. This leads us to examine the scope of alternative political institutions and rules in overcoming the potential inefficiency. Our paper also provides a wide range of examples to illustrate the different institutions used in actual practice to resolve such problems.


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