This chapter provides an informal rationalist model of state formation as an exchange between a central authority and a population. In the model, the central authority protects the population against external threats and the population disarms and pays taxes. The model specifies the conditions under which the exchange is self-enforcing, meaning that the parties prefer the exchange to alternative courses of action. These conditions—costly but winnable interstate war—are historically rare, and the cost of such wars can rise beyond the population’s willingness to sacrifice. At this point, the population prefers to avoid war rather than fight it and may prefer an alternative institution to the state if that institution can prevent war and reduce the level of extraction. Thus the modern centralized state is self-undermining rather than self-enforcing. A final section addresses alternative explanations for state formation.
Making and Keeping Promises: Regime Type and Power-Sharing Pacts in Peace Agreements