Dictators and Social Contracts

Prof. Dr. Roland Kirstein and Stefan Voigt

American Journal of Economics and Sociology, 2006, vol. 65, issue 4, pages 863-889

Abstract: This article explores conditions under which dictators comply with a social contract. We assume society to consist of two groups: one with a comparative advantage in using violence, the other with a comparative advantage in producing private goods. Violence can be used to produce security or to exploit the weaker group. The opportunity for exploitation is limited: it reduces the incentives of the exploited to produce private goods and increases the chances of revolution. Social contracts consist of the exchange of security against a share of the private good, produced at a high effort level. The model allows the derivation of conditions for either compliance or exploitation to occur and provides a comparative static explanation for the transition from one form of government to the other. Thus, it contributes to positive constitutional economics, the research program that is interested in explaining the emergence and change of constitutions. Copyright 2006 American Journal of Economics and Sociology, Inc..

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