Theory of Non-Territorial Internal Exit

Abstract

This paper presents a model of partial internal exit that captures the competitive dynamic between incumbent and potential governments in a non-territorial political system. This model particularly applies to the case of ‘cryptosecession’ that appears the most likely avenue for non-territorial decentralisation to ever eventuate. It demonstrates how fiscal exploitation is reduced and eventually eliminated as the capability of citizens to move to non-territorial jurisdictions increases. When interpreted as a model of cryptosecession, it shows how the balance of citizen opacity and government legibility determines the balance of fiscal exploitation versus equivalence.

Keywords: Non-territorial, jurisdiction, secession, internal exit, cryptoanarchy

JEL Classification: H00, H11, P43, D00