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Balkanization and assimilation: Examining the effects of state-created homogeneity

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  • Peter T. Leeson

Abstract

This paper investigates the effects of state-created homogeneity on the ability of socially distant individuals to trade. I show that where the state is absent, socially distant agents adopt the customs, practices and institutions of outsiders they desire to interact with. By creating a degree of homogeneity, agents signal their credibility to each other. These signals, in turn, enable inter-group exchange. Formal institutions provided by government can create noise in these signals. This noise incapacitates the information mechanism employed by heterogeneous agents to enable trade.

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  • Peter T. Leeson, 2007. "Balkanization and assimilation: Examining the effects of state-created homogeneity," Review of Social Economy, Taylor & Francis Journals, vol. 65(2), pages 141-164.
    • Handle: RePEc:taf:rsocec:v:65:y:2007:i:2:p:141-164
    DOI: 10.1080/00346760600709960
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    References listed on IDEAS

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    1. Leeson, Peter T., 2005. "Endogenizing fractionalization," Journal of Institutional Economics, Cambridge University Press, vol. 1(1), pages 75-98, June.
    2. Alberto Alesina & Eliana La Ferrara, 2000. "Participation in Heterogeneous Communities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 847-904.
    3. Curtin,Philip D., 1984. "Cross-Cultural Trade in World History," Cambridge Books, Cambridge University Press, number 9780521269315, January.
    4. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1990. "Toward a Theory of Discounted Repeated Games with Imperfect Monitoring," Econometrica, Econometric Society, vol. 58(5), pages 1041-1063, September.
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    Cited by:

    1. Peter T. Leeson & Claudia R. Williamson, 2011. "Can’t We All Just Get Along? Fractionalization, Institutions and Economic Consequences," Chapters, in: Christopher J. Coyne & Rachel L. Mathers (ed.), The Handbook on the Political Economy of War, chapter 4, Edward Elgar Publishing.
    2. Pavel Chalupnicek, 2010. "The CAPITAL in Social Capital: An Austrian Perspective," American Journal of Economics and Sociology, Wiley Blackwell, vol. 69(4), pages 1230-1250, October.
    3. Daniel Smith, 2014. "Heterogeneity and exchange: Safe-conducts in Medieval Spain," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(2), pages 183-197, June.
    4. Trent J. MacDonald, 2019. "The Political Economy of Non-Territorial Exit," Books, Edward Elgar Publishing, number 18871.
    5. Arne Schollaert & Dirk Van de gaer, 2008. "Boycotts, Power Politics, or Trust Building: How to Prevent Conflict?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(2), pages 356-379, June.
    6. Anthony Carilli & Christopher Coyne & Peter Leeson, 2008. "Government intervention and the structure of social capital," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 21(2), pages 209-218, September.
    7. ., 2019. "Economic theory of non-territorial unbundling," Chapters, in: The Political Economy of Non-Territorial Exit, chapter 1, pages 14-38, Edward Elgar Publishing.

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