Beyond Divide-and-Rule: Sparking Civil War to Hold on Power

We propose a model where an autocrat rules over an ethnically divided society. The dictator carefully selects the tax rate over the subjects' production and the nation's natural resources to maximize his rent under the threat of a revolution. We show that it may be in the interest of a weak ruler to foster civil strife to enhance his taxing capacity. By exacerbating existing group antagonisms the leader weakens potential opposition, thereby allowing him to increase fiscal pressure. Important stocks of natural resources and an unequal distribution of these resources across ethnic groups makes this strategy more profitable for the ruler.