Country size emerges from a trade-off between the economies of scale in
supplying public goods in large countries, and the costs of cultural and ethnic
heterogeneity, which may be increasing in the size of countries (Alesina and
Spolaore (1997)). This result hinges critically on the assumption that, when you
can share the costs of partially or completely non-rival public goods over larger
populations, per capita expenditure on these goods is lower.