The Art of Making Everybody Happy: How to Prevent a Secession

Michel Le Breton and Shlomo Weber ()
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Michel Le Breton: International Monetary Fund

IMF Staff Papers, 2003, vol. 50, issue 3, 4

Abstract: In this paper we examine compensation schemes that prevent a threat of secession by any of a country's regions. We prove that, under quite general assumptions on the distribution of citizens' preferences, there exist transfer schemes that are secession-proof. Moreover, we show that these compensation schemes entail a degree of partial equalization among regions: the gap between advantaged regions and disadvantaged regions has to be reduced but it should never be completely eliminated. We demonstrate that in the case of a uniform distribution of the nation's citizens, the secession-proof conditions generate the 50 percent compensation rule for disadvantaged regions. Copyright 2003, International Monetary Fund

JEL-codes: D70 H20 H73 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (95)

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Working Paper: The Art of Making Everybody Happy: How to Prevent a Secession (2003)
Working Paper: The art of making everybody happy: how to prevent a secession (2001)
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