This paper analyses the tendency for nations to break up as a result of a trade-off between the aggregate efficiency losses from separation and the redistributive gains to the majority, which can occur in all regions, even when there are no transfers across these regions. We show that...

This paper develops a model of the breakup or unification of nations. In each nation the decision to separate is taken by majority voting. A basic trade-off between the efficiency gains of unification and the costs in terms of loss of control on political decisions is highlighted. The model...