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Proprietary Public Finance: On Its Emergence and Evolution Out of Anarchy

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  • Stergios Skaperdas

    (Department of Economics, University of California-Irvine)

Abstract

Proprietary rule, whereby the state is owned by a ruler who maximizes tax revenues minus the costs of governing, is a useful ideal type that describes many of the states that have ever existed. The study of proprietary rule and its public finance, however, is comparatively scarce. I argue that proprietary rule emerges out of anarchy and its main alternative - self-governance - has di¢ culties surviving because of problems in providing effective internal and external security. Competitive proprietary rule (or, anarchy) is the market structure for the provision of security that is more stable, but is highly inefficient because all the savings that come out of the public provision of security are dissipated into contests for power among proprietary rulers. I also explore how competitive proprietary rule can be consolidated into more complex forms of governance.

Suggested Citation

  • Stergios Skaperdas, 2011. "Proprietary Public Finance: On Its Emergence and Evolution Out of Anarchy," Working Papers 101110, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:101110
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    1. Lucy F. Ackert & Ann B. Gillette & Mark Rider, 2011. "Cooperating to Resist Coercion: An Experimental Study," Experimental Economics Center Working Paper Series 2011-02, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.

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    JEL classification:

    • H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other
    • N47 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Africa; Oceania

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