The Economics of Power Consolidation

Abstract

Power and resources have been concentrating within major nations around the world, echoing a century-old prediction in political economy that remains a longstanding empirical puzzle with renewed urgency. I develop an economic model of how a society's distribution of power and resources evolves over time. Multiple lineages of players compete by accumulating power, which is modeled as an asset that increases one's probability of winning conflicts over resources. This model provides sharp equilibrium predictions for how a society’s distribution of power evolves and whether it approaches equality, oligarchy, or dictatorship in the long run. My main result shows that power and resources *generically* fall into the hands of a few when political competition is left unchecked in large societies, suggesting that today’s trends are no anomaly and will not self-correct.