Democracy on a Knife's Edge: A Model of Foreign Intervention and Policy Concessions

We develop a parsimonious model of international bargaining between a democratic incumbent and a foreign power that may intervene by leveraging the domestic opposition, either through electoral meddling or by backing a coup. Domestic disputes are modeled as Tullock contests, so disagreement payoffs arise endogenously, and the timing of each contest (sequential for elections, simultaneous for coups) generates distinct equilibria. Political costs of accepting a compromise may eliminate the zone of agreement, and against a coup the zone can be empty even when these costs are absent. Higher costs of electoral interference and lower intertemporal persistence of external influence expand the range of policy divergence over which a coup is the preferred threat, and so does greater patience of the foreign power when, as assumed, only meddling prolongs the interaction. The model also yields comparative statics on aggregate effort and incumbent survival under foreign support.