Petoria is an Authoritarian government in which Peter is the dictator. He rules over his property and enjoys the freedoms it brings him at first. One of the benefits Peter enjoys because he is a "government official" is diplomatic immunity. Peter especially enjoys this one by taking what he wants and by doing illegal acts. The second benefit Peter enjoys is the ability to annex property by "invading it". One example of him doing this is when he takes his friend's pool.
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Although Peter does enjoy owning his own country, the consequences of owning one start to catch up to him. One of the consequence of Peter not being a part of the United States of America anymore is that his children can not go to public school, which Peter does not seem to care that much about. Another consequence of him not being a part of USA is that he no longer receive town water, town sewage, and electricity. Finally, the third consequence of not being a part of the USA is that eventually he is not allowed to leave his "country" because they have set up a blockade around his house to stop him from invading the USA. This eventually leads to Peter being threatened by the US army. The army states that he has to surrender or they will blow up his "country". In the end due to these threats Peter succumbs to the USA and is forced to give up Petoria.