Democracy, collective action and intra-elite conflict

Ghosal, S. and Proto, E. (2009) Democracy, collective action and intra-elite conflict. Journal of Public Economics, 93(9-10), pp. 1078-1089. (doi: 10.1016/j.jpubeco.2009.05.003)

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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.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Ghosal, Professor Sayantan
Authors: Ghosal, S., and Proto, E.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of Public Economics
Published Online:10 June 2009

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