Purpose – For the purpose of forming a nation from the independent regions, the desirability is examined whether first we must seek economic integration of the regions or first military integration of the regions. The comparison of the “all-volunteer army system” and the “draft system” is also attempted.
Design/methodology/approach – Assuming the two regions facing the assault by an intruder, the Walrasian general equilibrium theory in economics is utilized for the comparison. For the construction of armed forces, Lindahl mechanism is introduced. The desirability is evaluated by the comparison of final utilities for the two integration processes achieved from the computation of equilibrium prices and burden shares for military expenses.
Findings – It is found that the all-volunteer army system is more desirable than the draft system in any of the two integrations. Furthermore, “first, the economic integration of the two regions, then the military integration” is more desirable than “first, the military integration of the two regions, then the economic integration.”
Research limitations/implications – Parameters in production and utility functions as well as the population sizes are specified numerically, although the specification is made randomly. The present simulation provides a starting point for further research with general (unspecified) production and utility functions.
Originality/value – This simulation provides a theoretical support for the actual design of the European integration. The originality consists in the derivation of the conclusion from the formulation of a purely theoretical model, which assumes individuals' maximizing behavior.
Fukiharu, T. (2011), "Regional Alliance toward the Formation of a Nation: A Simulation", Caruso, R. (Ed.) Ethnic Conflict, Civil War and Cost of Conflict (Contributions to Conflict Management, Peace Economics and Development, Vol. 17), Emerald Group Publishing Limited, Leeds, pp. 209-237. https://doi.org/10.1108/S1572-8323(2011)0000017014
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