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Hausken, Kjell
Knutsen, John F.
Year of Publication: 
Series/Report no.: 
Economics Discussion Papers 2010-6
The article proposes an enabling mechanism for the creation, adjustment and dissolution of governmental units, giving autonomy to each individual as in a direct democracy. The mechanism is designed such that Pareto optimality is possible, in contrast to earlier models which make various assumptions such as majority voting. Individuals are taken seriously acknowledging that they are best equipped to find their own solutions. The emphasis is on the practical approach of how individuals discover and implement their subjective preferences and how this discovery and implementation process can be facilitated and corresponding costs lowered. Governmental units are subjected to some of the same market forces as business firms. This brings the interaction between governmental units closer to a market structure, and serves to eliminate or reduce many of the coercive elements of government.
Territorial units
individual liberty
individual decision making
individual welfare
competitive markets
public choice
governmental units
endogenous determination of borders
constitutional economics
political economy
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Working Paper

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