Divide and Rule: An Origin of Polarization and Ethnic Conflict

Yikai Wang and Simon Alder

No 1242, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: We propose a theory of ethnic conflict where political elites strategically initiate conflicts in order to polarize society and thus sustain their own power. We provide a micro-foundation for this divide-and-rule strategy by modelling polarization as a lack of trust. Trust is shaped by economic interactions between different groups as in Rohner, Thoenig, and Zilibotti (2013a). Low trust reduces the expected gains from trade. By starting a conflict and thus interrupting trade, the elite can prevent trust from emerging. The elite will follow this strategy whenever it faces a large threat of revolution which originates in the common interest of people to reap gains from trade without being taxed by the elite. This is likely to be the case if current trust levels are high and if the cost of revolution is low.

Date: 2017
New Economics Papers: this item is included in nep-evo and nep-pol
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