VLAD TARKO, KYLE O’DONNELL
Abstract: The migration out of Europe and the establishment of North American colonies presents us with a great puzzle: why did the colonists establish democratic forms of governance? Considering that early democratic colonies appeared even before philosophical works such as those of Locke and Montesquieu were written, it is difficult to make the case that ideology was the driving factor. We show that the calculus of consent model proposed by Buchanan and Tullock (The calculus of consent, Liberty Fund, Indianapolis, 1962) offers a simple but subtle solution this puzzle. Because migrants formed much more homogeneous communities, and because, thanks to the large geographical expanse, the inter-jurisdictional externalities were small, the efficient level of consensus within each colony was much greater than in Europe, and the scope of efficient centralized decision-making was much smaller. Hence, a structure of decentralized democratic communities emerged as the efficient outcome.