Power sharing with weak institutions

Abstract

Democratic transitions, franchise extensions, and civil war settlements can often be seen as power-sharing agreements in which opposing factions try to use institutional structures to ‘lock in’ the terms of a settlement. But the commitment power inherent in institutions varies. When the institutional environment is weak and credibility is low, it is difficult for a powerful elite to tie its hands and give up power. This article studies a window-of-opportunity model in which an enfranchised elite faces a periodic threat. Institutional weakness is parameterized in terms of the elite’s marginal return to trying to undermine a power-sharing agreement. The analysis shows that (i) bargaining breaks down if the overall institutional environment is too weak and why it does; (ii) equilibrium agreements share more power with the opposition when the institutional environment is weak; (iii) there is a non-monotonic relation between power sharing and how often the opposition poses a threat; and (iv) power sharing is path dependent.

A comment on Powell and formal models of power sharing

“…In the full model in Powell (2024), elites invest positive effort in undermining a proposed power-sharing deal whenever w > 0, hence moving beyond the special case of his model analyzed here. Thus, introducing endogenous effort to renege not only incorporates into the model Powell's core substantive interest in weak institutions but also creates a wedge that makes elites strictly prefer temporary over permanent concessions-the latter are costly.…”

“…This also means that elites transfer all contemporaneous spoils to the opposition in any period that elites set policy and the majority poses a revolutionary threat-starkly highlighting elites' preferences for temporary transfers over permanent institutional concessions. In Powell (2024), institutional reform entails choosing a fraction of an asset to permanently transfer to the opposition, thus creating a basement level of spoils. 2 In equilibrium, elites propose the smallest level of this basement that suffices to prevent revolt.…”

“…11 These observations relate to long-standing debates about the bottom-up versus top-down nature of political transitions. In Acemoglu and Robinson (2006b), Castañeda Dower et al (2018), andPowell (2024), transitions are driven purely by bottom-up pressures. By contrast, these alternative ideas highlight various sources of top-down pressure for reform.…”

“…In this comment, I provide new insights into three foundational premises and results of Powell (2024) and related models. First, in the aforementioned models, elites strictly prefer to minimize the extent of permanent institutional concessions, and instead favor temporary transfers as needed to pacify the opposition.…”

“…Recovering the conventional intuition requires an additional assumption that institutional reform is costly, in the sense of destroying surplus akin to the foundational results on incentives to avoid costly conflict (Fearon, 1995;Powell, 2004Powell, , 2006. In Powell (2024), this occurs because elites pay endogenous effort costs to renege on a power-sharing deal, whereas Acemoglu and Robinson (2006b) and Castañeda Dower et al (2018) impose distinct assumptions to yield a qualitatively similar result. However, raising questions for future research, 'top-down' models of institutional reform suggest how permanent institutional concessions can in fact improve efficiency vis-à-vis temporary transfers.…”