Mobility and Conflict

Abstract

We study the role of inter-group differences in the emergence of conflict. In our setting, society comprises two groups who compete in every period for political power, i.e. the right to allocate economic resources between the groups. Individuals can move from one group to another at a cost: this cost of mobility is the index of inter-group differences. Since mobility is costly, the group in power can keep a larger share for itself. The extent of such economic exclusion is limited by two constraints: excessive exclusion reduces the opposition’s opportunity cost of engaging in political conflict (conflict constraint) and, if a group keeps too much for itself, individuals switching from the other group will dilute the per capita share of resources (mobility constraint). In determining the optimal group size by attracting switchers, the incumbent faces a trade-off between low per capita surplus and high political strength. We characterize the resource allocations, group membership decisions and conflict decisions that arise in equilibrium. The two mechanisms of conflict and mobility act as constraints to expropriation, and the optimal sharing is dictated by which constraint binds. The extent of sharing turns out to be non-monotonic in the cost of mobility. We show that the limited commitment with respect to switching can lead to inefficient conflict in equilibrium. We also derive several testable predictions about when conflict will arise. Specifically, we show that conflict may arise when the cost of mobility is moderate, but may not necessarily emerge when the cost is high.