Optimal Secession Rules


Bordignon, Massimo ; Brusco, Sandro


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URL: http://ub-madoc.bib.uni-mannheim.de/592
URN: urn:nbn:de:bsz:180-madoc-5924
Document Type: Working paper
Year of publication: 1999
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Subject headings (SWD): Föderation , Austritt , Gesetz
Abstract: Should the constitution of a federation allow for peaceful secession? Constitutionally defined secession rules are optimal ex post if thefederation 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.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Bordignon, Massimo ; Brusco, Sandro (1999) Optimal Secession Rules. Open Access [Working paper]
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