The Emergence and Persistence of Oligarchy: A Dynamic Model of Endogenous Political Power

Ilwoo Hwang () and Jee Seon Jeon ()

Working Paper Series from Institute of Economic Research, Seoul National University

Abstract: We study an infinite-horizon multilateral bargaining game in which the status quo policy, players¡¯ recognition probabilities, and their voting weights are endogenously determined by the previous bargaining outcome. With players not discounting future payoffs, we show that the long-run equilibrium outcome features the concentration of power by one or two players, depending on the initial bargaining state. If the players¡¯ initial shares are relatively equal, they successfully prevent tyranny, but a two-player oligarchy nevertheless emerges and persists. The same results are obtained with payoff discounting, provided that the players¡¯ shares are not too small. Our results highlight the importance of the initial power distribution and discounting of future payoffs in the long-run development of power configuration.

Keywords: Dynamic bargaining; Endogenous political power; Endogenous institution; Markov perfect equilibrium, Oligarchy (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-cwa, nep-gro, nep-gth, nep-mic and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:snu:ioerwp:no145

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