Should You Arm Your Future Victims?

Abstract

A model is presented where the ruler may arm the producers, in order to convince them that he will not expropriate them ex post. This sets an upper limit on the tax rate, not higher than their probability of losing their income, should a war occur. The relevance of this analysis is illustrated by discussing various case studies, involving post-conflict situations. Some variants of the model are presented for highlighting some implementation problems, related to asymmetric information or to positive initial endowments of weapons or non-produced wealth, which may lead to war in equilibrium.