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A person's social identity has many facets, involving language, personal interests, customs, religion, and ethnicity, among other attributes. Yet, all over the world many people seek to define themselves in exclusive terms. This paper develops a simple model of personal incentives and group interests to offer one possible explanation for the puzzle. (JEL: D6, D7)
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Keywords: conflict; efficiency; externalities; identity; populism

Appeared or available online: February 1, 2019

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