1The optimal size for a minority +

We address the issue of the optimal size of an ethnic or religious minority from the minority’s perspective. Externalities are introduced, whereby cooperation by members of one group and the relative size of that group, affect the incentives to cooperate by members of the other group. The model assumes the existence of altruism, which is independent of the affiliation of the trading partner with whom one is transacting. We find the following results. First, cooperation requires social segmentation. As a result, there will never be intergroup cooperation. Second, bigger is not necessarily better, and the minority will often be interested in limiting its size. It will, however, never be optimal for the minority to totally assimilate itself into the majority. Third, there are instances in which the minority will be interested in promoting cooperation within the majority despite the ensuing negative externality on its own members ’ welfare. The model provides insights on social conflicts both between groups and within groups