The Rawlsian Principle and Secession-Proofness In Large Heterogeneous Societies

Abstract

This paper examines a 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 the given (flnite or inflnite) interval. Every jurisdiction chooses a location of a public good and shares the cost of production among its residents. Each individual is responsible for both transportation cost to the location of the public good and her contribution towards the production of the public good. We consider a notion of a secession-proof allocation where no group of individuals can make all its members better ofi by choosing a location of the public good and a cost-sharing mechanism among its members. We show that if the support of individuals’ distribution is the real line <, the only secession-proof allocation is Rawlsian that equalizes the utilities of all individuals in the society. In the case of bounded support we show that there is a degree of approximation to the Rawlsian solution that reconciles the secession-proofness and the weakened Rawlsian principle.