Civil War and the Social Contract.

In this contract-theoretic model the government promises a transfer to its potential opponent in return for not engaging in a civil war. Two causes of civil war are identified: (i) imperfect credibility increases the cost of the required transfer, and may make it unfeasible; (ii) asymmetric information faces the government with the classic efficiency/rent-extraction trade off, and civil war is used as a screening device. This problem can be solved by creating a mixed army. The model determines whether a military regime or a redistributive state prevails in a peaceful equilibrium. A statistical illustration is presented, using African data. Copyright 2003 by Kluwer Academic Publishers