A Model of a Predatory State

Boaz Moselle and Benjamin Polak

The Journal of Law, Economics, and Organization, 2001, vol. 17, issue 1, 1-33

Abstract: We provide a model of a primitive state whose rulers extort taxes for their own ends. This "predatory" state can result in lower levels of both output and popular welfare than either organized banditry or anarchy. The predatory state may provide public goods, such as protection, and hence may superficially resemble a contractual state. But the ability to provide such goods can actually reduce popular welfare after allowing for tax changes. Moreover, the kinds of public goods that predatory states provide are those that increase revenue, not necessarily welfare. We consider when primitive states are likely to emerge from organized banditry, and argue that poverty may result in statelessness rather than vice versa. We show that even a weak state (in transition from banditry) can be bad for output and welfare, and that a "corrupt" state that makes side deals with bandits is especially bad. Copyright 2001 by Oxford University Press.

Date: 2001
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