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If territory goes to the nation which values it most as a source of revenue, nations will be shaped to maximize joint revenue, net of collection costs. Trade, as a major potential revenue source, should imply large nations; rent should imply small nations; and labor should imply that nations will have closed boundaries or be culturally homogeneous (to maximize exit costs). I show how this fits the pattern of European experience from Roman times to the present. Results of preliminary numerical tests of predictions of the theory are given.
David D. Friedman (Tue,) studied this question.