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A Cooperative Game Theory of Noncontiguous Allies

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  • Arce M, Daniel G
  • Sandler, Todd

Abstract

This paper develops a cooperative game-theoretic representation of alliances with noncontiguous members that is based on cost savings from reducing overlapping responsibilities and sequestering borders. For various scenarios, three solutions (the Shapley value, nucleolus, and core's centroid) are found and compared. Even though their underlying ethical norm varies, the solutions are often identical for cases involving contiguous allies and for rectangular arrays of noncontiguous allies. When transaction costs and/or alternative spatial configurations are investigated, they may then differ. In all cases the cooperative approach leads to a distribution of alliance costs that need not necessarily coincide with the traditional emphasis on gross domestic product size as a proxy for deterrence value (the exploitation hypothesis). Instead, burdens can now be defined based upon a country's spatial and strategic location within the alliance. Copyright 2001 by Blackwell Publishing Inc.

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Bibliographic Info

Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

Volume (Year): 3 (2001)
Issue (Month): 4 ()
Pages: 391-411

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Handle: RePEc:bla:jpbect:v:3:y:2001:i:4:p:391-411

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Cited by:
  1. Michael Finus & Bianca Rundshagen, 2009. "Membership rules and stability of coalition structures in positive externality games," Social Choice and Welfare, Springer, Springer, vol. 32(3), pages 389-406, March.
  2. David Rietzke & Brian Roberson, 2010. "The Robustness of ‘Enemy-of-My-Enemy-is-My-Friend’ Alliances," Purdue University Economics Working Papers 1258, Purdue University, Department of Economics.
  3. Arce M., Daniel G. & Sandler, Todd, 2003. "Health-promoting alliances," European Journal of Political Economy, Elsevier, Elsevier, vol. 19(2), pages 355-375, June.
  4. Dan Kovenock & Brian Roberson, 2007. "Coalitional Colonel Blotto Games with Application to the Economics of Alliances," Purdue University Economics Working Papers 1207, Purdue University, Department of Economics.

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