Ethnic Diversity, Civil War and Redistribution

In a game-theoretic framework, we analyse the circumstances under which self-enforcing redistribution and power-sharing coalitions can be used to peacefully resolve ethnic conflict. The existence of a pacific equilibrium depends crucially on ethnic diversity (the number of ethnic groups). The risk of civil war is comparatively high at intermediate levels of ethnic diversity. The risk is low if a society is either very homogeneous or very diverse. Predictions of the model are consistent with evidence on the incidence of civil war.