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Why Ungoverned Space? A Political Economy Approach

September 01, 2012
Eli Berman

Working Paper

This note develops a simple model to illustrate formally why ungoverned spaces are an economic puzzle. It would be surprising for a social welfare maximizing government to leave space ungoverned (i.e., with no local public good provision) because we think of public goods as efficient. Yet if public goods are efficient enough for a responsive government to provide them, even a kleptocrat would prefer to govern and tax rather than leave space wholly ungoverned. It then sketches a research agenda to investigate that puzzle