The politics of co-optation

Our model consists of two groups. Group I holds political power and Group 2 threatens this power. Group I decreases the probability of its upheaval by co-opting some agents from Group 2 into a more benign third group. Improvements in the upheaval technology lead to fewer but better co-optation offers. Increasing the size and/or the degree of fragmentation of Group 2 has the opposite effect. If the co-opted group also threatens Group 1, co-optation transfers are reduced. Our model provides a new explanation of why growth is a politically stabilizing force. The theory suggests that, in post-Communist privatizations, unstable governments will give large benefits to a small number of beneficiaries while stable governments will give small benefits to a large group. J. Comp. Econ., December 2001, 29(4), pp. 591-607. Universita' di Modena c Reggio Emilia, 1-41100 Modena, Italy; and Centre for Economic Policy Research; and Royal Holloway, University of London, Egham, Surrey TW20 OEX, United Kingdom; and Centre for Economic Policy Research. (C) 2001 Elsevier Science.