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, and it may avoid explicit secession rules. If transfers are costly, the trade-off is present even if ex post 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.

Bordignon, M., Brusco, S., Optimal secession rules, <<EUROPEAN ECONOMIC REVIEW>>, 2001; (45 (10)): 1811-1834. [doi:10.1016/S0014-2921(00)00095-7] [http://hdl.handle.net/10807/8055]

Optimal secession rules

Bordignon;
2001

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, and it may avoid explicit secession rules. If transfers are costly, the trade-off is present even if ex post 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.
Inglese
Bordignon, M., Brusco, S., Optimal secession rules, <<EUROPEAN ECONOMIC REVIEW>>, 2001; (45 (10)): 1811-1834. [doi:10.1016/S0014-2921(00)00095-7] [http://hdl.handle.net/10807/8055]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/8055
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