and economic development is analyzed in section 3. Section 4 studies the political stability
of dictatorship. The role of the threat of anarchy is examined in section 5. Finally, section
6 concludes.
2 A model of dictatorship: characterization
Consider an economy under dictatorship that is populated by overlapping generations of
people living for two periods and ruled by a dictator. We assume that the dictator is
infinitely lived (i.e. the dictator and his successors) because we are interested in dicta-
torship as a regime. The dictator has the monopoly of power over the fiscal and police
administrations. He solely determines the amount of taxes to levy. A part of them is
allocated to the payroll of his police forces, judiciary and fiscal agents as well as to his
own consumption. The other part is used to finance the maintenance of social order.
We study the behavior of this dictator in an overlapping generations model extended from
Diamond (1965). Time is discrete and goes from 0 to ∞. At each period there are N
(normalized to 1) citizens and there is no population growth.
2.1 The economy
All agents (including the dictator) in this economy are price-takers and all markets are
competitive. At each period t, there is one physical good produced from capital, K , and
labor, L. This physical good can be consumed or invested by the citizens to build future
capital, and consumed by the dictator or redistributed to the citizens under the form of
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