A Model of Ethnic Conflict
Joan Esteban
Instituto de Analisis EconcOmico (CSIC)
Debraj Ray
New York University and Instituto de Analisis EconeOmico (CSIC)
May 2006
Abstract
We present a model of conflict, in which discriminatory government policy or social intoler-
ance is responsive to various forms of ethnic activism, including violence. It is this perceived
responsiveness — captured by the probability that the government gives in and accepts a pro-
posed change in ethnic policy — that induces individuals to mobilize in support for their cause.
Yet, mobilization is costly and demonstrators have to be compensated accordingly. Individuals
have to weigh their ethnic radicalism with their material well-being to determine the size of
their money contribution to the cause. Our main results are: (i) a one-sided increase in radical-
ism or in population size increases conflict; (ii) a one-sided increase in income has ambiguous
effects depending on the elasticity of contributions to income; (iii) an increase in within-group
inequality increases conflict; and (iv) an increase in the correlation between ethnic radicalism
and inequality also increases conflict.
We thank Tzachi Gilboa and Rohini Pande for useful comments. Ray acknowledges support from the
National Science Foundation under grant number 0241070, and thanks the London School of Economics,
STICERD in particular, for their warm hospitality during the preparation of this revision. Esteban is a
member of Barcelona Economics and is grateful for support from the Generalitat de Catalunya and the
CICYT (SEC-2003-1961). This research is part of the Polarization and Conflict research project CIT2-CT-
2004-506084 funded by the European Commission-DG Research Sixth Framework Programme