Size of Nations, Economics Approach to the
The economics approach to the size of nations proceeds from the trade-off between benefits and costs of larger size. Benefits of scale come from sharing public goods among more taxpayers. Larger countries can also better internalize cross-regional externalities and insure against regional shocks. But a larger size brings about higher heterogeneity of preferences over public policies. The trade-off depends on the domestic political regime and on the international environment. In a world of free trade and low international conflict small countries can prosper, while a large size matters more when trade barriers and conflict are high.
KeywordsNational borders Buchanan, J. Clubs Democracy Economic analysis of conflict Economies and diseconomies of scale Heterogeneity of preferences Globalization Local public goods Median voter Political economy and economics Rent seeking Size of economies Size of nations
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