Making exit costly but efficient: the political economy of exit clauses and secession

Martijn Huysmans () and Christophe Crombez
Additional contact information
Martijn Huysmans: Utrecht University
Christophe Crombez: KU Leuven

Constitutional Political Economy, 2020, vol. 31, issue 1, No 4, 89-110

Abstract: Abstract This article presents a political economic analysis of exit from federations. After the federation has formed, members’ benefits from it may be different than expected. If a member ends up not benefitting, it may wish to secede i.e. exit the federation. Based on formal models, we show how state-contingent exit penalties can induce socially efficient exit decisions: they force the secessionist member to take into account the lost benefits of the federation for the other. Even if ex-ante specified exit penalties cannot be made state-contingent, they may still enhance social welfare by preventing forceful exit. Empirical evidence concerning Montenegro, Saint Kitts and Nevis, and the EU is compatible with these claims. In spite of the simplifications inherent to any modeling exercise, we hope that our results stimulate more research into exit clauses as a means to mitigate the problem of violent secessionism.

Keywords: Exit clauses; Secession; Separatism; Federations; Civil war (search for similar items in EconPapers)
JEL-codes: D74 H77 P48 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10602-019-09295-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:copoec:v:31:y:2020:i:1:d:10.1007_s10602-019-09295-1

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10602/PS2

DOI: 10.1007/s10602-019-09295-1

Access Statistics for this article

Constitutional Political Economy is currently edited by Roger Congleton and Stefan Voigt

More articles in Constitutional Political Economy from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().