We study the resource allocation problem in a divided society in which the ruling group has the decision rights to allocate resources, like patronage goods, based on group identity. We highlight two important forces that can constrain the ruling group’s behavior: an individual’s ability to move between groups and the threat of conflict. Mobility and conflict are two costly mechanisms that members of the group without political power can use to improve payoff. We study the substitutability of the two mechanisms. We find that resource sharing occurs in equilibrium. There exists a non-monotonic relationship between resource sharing and the cost of mobility. Our predictions are consistent with several stylized facts that are not explained by earlier models. Open conflict may not necessarily occur when mobility cost is high. Instead, the ruling group can share enough resources with the opposition to mitigate the threat of conflict. When the mobility constraint dictates the resource sharing rule, the ruling group prefers to maintain an optimal size that is large enough to increase winning probability in competition but small enough to give each member high per capita payoff. If the ruling groups initial size is below the optimal size, we do see inter group switching in equilibrium.