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Passports for sale: The political economy of conflict and cooperation in a meta-club

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  • Konrad, Kai A.
  • Rees, Ray

Abstract

Some of the member states of the European Union sell citizenship or residence to wealthy foreign investors. We analyze these "golden-passport" programs as a study in the political economy of conflict and cooperation in an international meta-club. Seen through the lens of club goods theory, the EU is a club of nations, each of which can be interpreted as itself a club. Each single nation reserves the right to govern the admission of new individual members into its own club, and new members automatically benefit from the EU wide meta-club good. We characterize the unique equilibrium when individual clubs that may differ in membership size are free to choose the terms on which they admit members, and evaluate it from the point of view of the wellbeing of the set of clubs as a whole. We identify club size and benefits as well as differences in cost externalities as the key determinants. We also consider how the set of clubs as a whole can respond to the economic inefficiency problems such a situation creates.

Suggested Citation

  • Konrad, Kai A. & Rees, Ray, 2020. "Passports for sale: The political economy of conflict and cooperation in a meta-club," Munich Reprints in Economics 84727, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:84727
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    Cited by:

    1. Bednorz, Jan, 2024. "Working from anywhere? Work from here! Approaches to attract digital nomads," Annals of Tourism Research, Elsevier, vol. 105(C).
    2. Arye L. Hillman & Ngo Long, 2022. "Immigrants as future voters," Public Choice, Springer, vol. 190(1), pages 149-174, January.
    3. Dominika Langenmayr & Lennard Zyska, 2021. "Avoiding Taxes: Escaping the Exchange of Information: Tax Evasion via Citizenship-by-Investment," Working Papers 204, Bavarian Graduate Program in Economics (BGPE).
    4. Langenmayr, Dominika & Zyska, Lennard, 2023. "Escaping the exchange of information: Tax evasion via citizenship-by-investment," Journal of Public Economics, Elsevier, vol. 221(C).

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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