Democracy, collective action and intra-elite conflict

Sayantan Ghosal, Eugenio Proto*

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)

11 Citations (Scopus)

Abstract

We analyze a model where there is uncertainty about the future power of two ex-ante symmetric elites to appropriate surplus, and ex-ante surplus sharing agreements are not binding. We show that in an oligarchy, the stronger elite appropriates the entire available surplus, whereas a democracy results in a more balanced surplus allocation between the two elites. In a democracy, the newly enfranchised non-elite organize to act collectively, so that the weaker elite can credibly threaten to form a coalition with the organized non-elite against the stronger elite. Such a threat ensures that the more balanced surplus sharing proposal chosen by majority voting is renegotiation-proof. Therefore, sufficiently risk-averse elites unanimously choose democracy as a form of insurance against future imbalances in relative power. We emphasize that franchise extension to, and low cost of organizing collective political activity for, the non-elite are both necessary features of a democracy. Our formal analysis can account for the stylized facts that emerge from a comparative analysis of Indian and Western European democracies.

Original languageEnglish
Pages (from-to)1078-1089
Number of pages12
JournalJournal of Public Economics
Volume93
Issue number9-10
DOIs
Publication statusPublished - 1 Oct 2009

Keywords

  • Bargaining
  • Coalition formation
  • Collective action
  • Conflict
  • Democracy
  • Party formation
  • Risk-sharing

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