IDEAS home Printed from https://ideas.repec.org/a/oup/publus/v37y2007i2p190-208.html
   My bibliography  Save this article

Valuing Exit Options

Author

Listed:
  • Jenna Bednar

Abstract

This article examines an important aspect of federalism: the effect of a secession threat on the union's productivity. Productivity requires a compliance maintenance regime with credible punishment. An exit option gives a government the alternative of opting out of the union rather than suffer the disutility of a punishment. Equilibria are characterized over a continuous range of exit option values. The results indicate that only exit options that are superior to union membership improve utility; those of moderate value decrease net and individual government utility due to their harmful effect on compliance maintenance. A prescription that emerges from these results is that if the exit option is inferior to the benefit from a thriving union, member governments should voluntarily submit to measures that make exit as costly as possible. Copyright 2007, Oxford University Press.

Suggested Citation

  • Jenna Bednar, 2007. "Valuing Exit Options," Publius: The Journal of Federalism, CSF Associates Inc., vol. 37(2), pages 190-208, Spring.
    • Handle: RePEc:oup:publus:v:37:y:2007:i:2:p:190-208
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/publius/pjm001
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alexander Libman, 2012. "Sub-national political regimes and asymmetric fiscal decentralization," Constitutional Political Economy, Springer, vol. 23(4), pages 302-336, December.
    2. Nikitas Konstantinidis, 2008. "Gradualism and uncertainty in international union formation: The European Community’s first enlargement," The Review of International Organizations, Springer, vol. 3(4), pages 399-433, December.
    3. Jonathan B. Slapin and Julia Gray, University of Pittsburgh, 2009. "Why Some Regional Trade Agreements Work: Private Rents, Exit Options, and Legalization," The Institute for International Integration Studies Discussion Paper Series iiisdp289, IIIS.
    4. Martijn Huysmans & Christophe Crombez, 2020. "Making exit costly but efficient: the political economy of exit clauses and secession," Constitutional Political Economy, Springer, vol. 31(1), pages 89-110, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:publus:v:37:y:2007:i:2:p:190-208. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/publius .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.