Ethnic Conflict: A Model of Concessions

Abstract

The Coase Theorem suggests that the ability of completely informed agents to make transfers should generally avert conflict. This thesis considers a complete information model of ethnic conflict where the dominated group consists of heterogeneous agents, but the dominant group can only bargain with the dominated group as a whole. This broadly captures a political system with race-based parties and coalitions. Moreover in this thesis the dominant group can make credible ex-ante transfers to the dominated group outside a standard bargaining framework. Then conditions arise where conflict occurs.