The Emergence and Persistence of Oligarchy: A Dynamic Model of Endogenous Political Power

We study an infinite-horizon multilateral bargaining game in which the status quo policy, players’ recognition probabilities, and their voting weights are endogenously determined by the previous bargaining outcome. With perfectly farsighted players, we show that the equilibrium long-run outcome features the concentration of power by one or two players, depending on the initial bargaining state. If the players’ initial shares are relatively equal, they successfully prevent tyranny, but a two-player oligarchy nevertheless emerges and persists. If the players are imperfectly farsighted, the same results are obtained provided that the players’ shares are not too small. Our results highlight the importance of the initial power distribution and farsightedness in the long-run development of power configuration.