1. Introduction
A standard result of non zero-sum games is that the fewer the number of players, the better the
conditions for the emergence of co-operation. When this result is translated into the political
arena, a democracy based on electoral competition between two political parties appears as the
more favourable case for the development of tacit co-operation between the players. A second
basic result is that repetition of the game allows for reciprocity and the emergence of co-
operation. When this result is used to analyse political competition, the repeated nature of the
electoral process provides the ground for enforcement mechanisms. Hence, if parties do not
heavily discount the future the possibility of punishment coming from voters or other parties
would allow for co-operation in the politic-economic game.
The primary concern of this paper is to work out the implications of these two general results
for co-operative behaviour in a situation where the political system is dominated by two strong,
opportunistic parties competing in an economy heavily dependent on the export of a
commodity. Non-cooperative behaviour between parties brings about inefficiencies that
accumulate at an increasing rate over time and lead to political instability resulting from
economic deterioration. The analysis is particularly relevant for mineral economies, in which
foreign revenues constitute a significant part of fiscal revenues and where, due to public
ownership of the natural resources, such revenues accrues directly to the government
Since a binding agreement as an external solution is unlikely due to the close association
between the incumbent party and the government, co-operation prospects may need to rely on
self-enforcing strategies to provide a internal solution.1 The co-operative spirit of the game is
given by the preservation of democracy in the long term. The main threat to both parties is the
possible intervention of a dictator who will end the democratic game. Here the dictator option is
a source of enforcement.2 The incentives for defection are related to the incumbent's desire to
1 The internal solution (self-policing) is basic in the sense that understanding the prospects for and
obstacles in the way of this solution helps to see what sort of external solution is necessary (Taylor, 1987).
2 By introducing the dictator as a source of enforcement the paper attaches a positive role to him in a
democratic society (of course, his value to society vanishes once he is power!).