Why do countries break up? What are the costs and benefits of secessions? When are secessions efficient or inefficient from an economic perspective? How is political disintegration related to globalization and democratization? Do decentralization and federalism affect the incentives to secede? How is the size of nations impacted by conflict and wars? These complex questions, traditionally addressed by historians and political scientists, are now also at the center of a growing economics literature on the formation and breakup of sovereign states and political unions. This paper presents concepts and results from this line of economic analysis. First, we discuss the key trade-off between economies of scale in the provision of public good and political costs from heterogeneity of preferences. Second, we present four economic perspectives on the formation of borders: efficient borders, borders as democratic outcomes, borders in a world of rent-seeking Leviathans, and borders as outcomes of conflict and wars. Finally, we provide an analytical illustration of the basic ideas within a simple framework.
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Eugene Kontorovich and Francesco Parisi
The introduction outlines the scope of the book, and describes the problem of corruption, pointing out common criminal law enforcement challenges, and offering better anticorruption solutions by drawing on both legal and economic reasoning. The phenomenon of corruption is described and defined, as are other key concepts, such as what is meant when referring to the criminal justice system, or a country’s integrity mechanisms, and why is it necessary to identify efficiency criteria for criminal law enforcement. Law and economics offer a broad range of tools for controlling corruption; how they are used depends on mutual understanding and collaboration between the disciplines.