Secession-proofness in large heterogeneous societies

This paper examines the model of multi-jurisdictional formation considered by Alesina and Spolaore (1997) and Le Breton and Weber (2003), where the distribution of individuals is given by Lebesgue measure over a bounded interval. Every jurisdiction chooses a location of a public good and shares its cost of production among its residents. In addition, each individual incurs a transportation cost. We consider a notion of secession-proof allocation where no group of individuals can make all its members better or by choosing both a location of the public good and a cost-sharing mechanism among its own members. We examine secession-proof allocations and show that they may fail to satisfy some desirable requirements, including the Rawlsian principle. We show however that secession-proofness can be reconciled with an approximate Rawlsian principle in large societies.