Negotiating Constitution for Political Unions

Vikas Kumar
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Vikas Kumar: Indira Gandhi Institute of Development Research

Microeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: This paper provides a cradle-to-grave model for political union between two unequally endowed states. We introduce negotiated, contested, and time-consistent contested constitutions to address various classes of merger problems. Merger agreement is shown to be path dependent and, in some cases, time inconsistent. The possibility of contest constrains the set of mutually agreeable tax rates and provides stability to a constitution. Demographic heterogeneity constrains the set of mutually agreeable mergers. Rent extracted by technologically advanced province for transferring technology to the backward province in a union is shown to be increasing in complexity of technology but bounded from above. The model can also support the possibility of historical cycles of political geography. The main contribution of this paper is to highlight the role of technology gap and unequal distribution of resources in all the above cases.

Keywords: Bargaining; Constitution; Contest; Political Union (search for similar items in EconPapers)
JEL-codes: C72 C78 D02 D72 D74 F51 K39 (search for similar items in EconPapers)
Date: 2008-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Negotiating constitutions for political unions (2011)
Working Paper: Negotiating Constitution for Political Unions (2008)
Working Paper: Negotiating constitution for political unions (2008)
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