AbstractTerritorial power-sharing arrangements in civil wars face trade-offs between broadening inclusions and dangers of secession. This article argues that in civil wars over a government, the commitment problem is overcome as secession is not in its political agenda, however, the central concern pertains to the issues that arise in policymaking. Granting autonomy at the subnational level leads to peace without weakening the central authority. In addition, in bargaining over policies with multiple conflict parties, a government strategically makes concessions of territorial power-sharing to retain the status quo of national policy and positions in the government in a situation where dominance by one party is not attainable. It signals a government’s less resolute attitude in accommodating additional rebel groups. Hence, territorial power-sharing entails positive externality. This article finds that in civil wars over a government, at a dyad level, the positive effects of territorial power-sharing in peace decreases over time. Instead, the likelihood of a peace agreement with another rebel group increases. The results imply that the effectiveness of the autonomy arrangement depends on strategic concessions and broader future inclusions.