Economic Analysis of International Law

Economic Analysis of International Law

Edited by Eugene Kontorovich and Francesco Parisi

Through original and incisive contributions from leading scholars, this book applies economics and other rational choice methods to understanding public international law. The chapters cover a range of topics, from the sources of international law to means of enforcement. The application of economic analysis to public international law is still in its early stages, and Economic Analysis of International Law provides a useful overview, as well as setting directions for new research.

Chapter 1: The economics of political borders

Enrico Spolaore

Subjects: economics and finance, law and economics, law - academic, law and economics, public international law


Why do countries break up? What are the costs and benefits of secessions? When are secessions efficient or inefficient from an economic perspective? How is political disintegration related to globalization and democratization? Do decentralization and federalism affect the incentives to secede? How is the size of nations impacted by conflict and wars? These complex questions, traditionally addressed by historians and political scientists, are now also at the center of a growing economics literature on the formation and breakup of sovereign states and political unions. This paper presents concepts and results from this line of economic analysis. First, we discuss the key trade-off between economies of scale in the provision of public good and political costs from heterogeneity of preferences. Second, we present four economic perspectives on the formation of borders: efficient borders, borders as democratic outcomes, borders in a world of rent-seeking Leviathans, and borders as outcomes of conflict and wars. Finally, we provide an analytical illustration of the basic ideas within a simple framework.