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

27 Pages Posted: 29 Jun 2011

See all articles by Stergios Skaperdas

Stergios Skaperdas

University of California - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: June 28, 2011

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 difficulties surviving because of problems in providing effective internal and external security. Competitive proprietary rule (or, organized 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.

JEL Classification: H590, N470

Suggested Citation

Skaperdas, Stergios, Proprietary Public Finance: On its Emergence and Evolution Out of Anarchy (June 28, 2011). CESifo Working Paper Series No. 3495, Available at SSRN: https://ssrn.com/abstract=1873868 or http://dx.doi.org/10.2139/ssrn.1873868

Stergios Skaperdas (Contact Author)

University of California - Department of Economics ( email )

3123 Social Science Plaza A
Irvine, CA 92697-5100
United States
714-824-4167 (Phone)
714-824-2182 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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