This article presents a political economic analysis of exit from federations. Over time, members' benefits from being … to real options theory. Even if ex-ante specified exit penalties cannot be made state-contingent, they may still enhance … social welfare by preventing secession wars. This finding runs counter to the dominant view in the literature that exit …

The vast majority of federations lack exit clauses. Existing theoretical explanations of this stylized fact focus on … that in the case of the EU, an exit-voice logic lies at the basis of Article 50. More generally, in heterogeneous (quasi-)federations …

points) is identified. The theory predicts war to be more likely when resource and group concentration are high, and the …