The number and size of nations revisited: Endogenous border formation with non-uniform population distributions

Abstract

The endogenous border formation model of Alesina and Spolaore (1997) has received a lot of attention in the economics community. One of its central messages is that in a democratic world in equilibrium there is an ineciently large number of nation states. However, this result is obtained under very specic assumptions like a uniform population distribution and no population mobility. In this paper, I generalize the model of Alesina and Spolaore allowing for population distributions other than the uniform distribution. Since this generalization is accompanied by the loss of tractability in closed form, I calculate the equilibria by means of numerical computation. It turns out that the above-mentioned central result is highly sensitive to the choice of population distribution and that the model shows four different regimes depending on the chosen distribution. Furthermore, the behaviour implied by the Alesina and Spolaore model with uniform population distribution is the exception, not the rule.Size of Nations; Endogenous Border Formation; Computational Economics