We examine the incentives of regions in a country to unite or to separate. We find that smaller regions have greater incentives to unite, relative to larger regions. We show, however, that on the whole, majority voting on separation and union generates excessive incentives to separate. This leads us to examine the scope of alternative political institutions and rules in overcoming the potential inefficiency. Our paper also provides a wide range of examples to illustrate the different institutions used in actual practice to resolve such problems.

referendum, secession, union, voting
Analysis of Collective Decision-Making (jel D7), Taxation, Subsidies, and Revenue (jel H2), State and Local Government; Intergovernmental Relations (jel H7)
Tinbergen Institute Discussion Paper Series
Tinbergen Institute

Goyal, S, & Staal, K. (1999). The Political Economy of Regionalism (No. TI 00-014/1). Tinbergen Institute Discussion Paper Series. Retrieved from http://hdl.handle.net/1765/7698