Caselli, Francesco and Coleman II, Wilbur John (2006) On the theory of ethnic conflict. 732. Centre for Economic Performance, London School of Economics and Political Science, London, UK.
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We present a theory of ethnic conflict in which coalitions formed along ethnic lines compete for the economy’s resources. The role of ethnicity is to enforce coalition membership: in ethnically homogeneous societies members of the losing coalition can defect to the winners at low cost, and this rules out conflict as an equilibrium outcome. We derive a number of implications of the model relating social, political, and economic indicators such as the incidence of conflict, the distance among ethnic groups, group sizes, income inequality, and expropriable resources.
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