The Rawlsian Principle and Secession-Proofness in Large Heterogeneous Societies

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 (finite or infinite) interval. Every jurisdiction chooses a location of a public good and shares the cost of production among its residents. Each individual covers transportation cost to the location of the public good, and contributes 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 off by choosing both a location of the public good and a cost-sharing mechanism among its own members. We show that if the society’s population is distributed over the real line <, the only secession-proof allocation is Rawlsian, which 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.