Internal Rebellions and External Threats: A Model of Government Organizational Forms in Ancient China

In ancient China, a ruler needed to handle both internal rebellions and external threats. To decrease the possibility of internal rebellions, a ruler could organize the government to establish the division of power among ministers. While effective in preventing internal rebellions, this approach could make the defense of the country against external threats less effective. The trade‐off between preventing internal rebellions and dealing with external threats in a ruler's choice of government organizational form is affected by factors such as the size of the population, the level of coordination efficiency, and the degree of increasing returns to the military sector. If the magnitude of external threats increases, regardless of the type of equilibrium organizational form, the equilibrium level of the concentration of power among division heads increases.