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Inequality and Inefficiency in Joint Projects

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  • Debraj Ray
  • Jean-Marie Baland
  • Olivier Dagnelie

Abstract

A group of agents voluntarily participates in a joint project, in which efforts are not perfectly substitutable. The output is divided according to some given vector of shares. A share vector is "unimprovable" if no other share vector yields a higher sum of payoffs. When the elasticity of substitution across efforts is two or lower, only the perfectly equal share vector is unimprovable, and all other vectors can be improved via Lorenz domination. For higher elasticities of substitution, perfect equality is no longer unimprovable. Our results throw light on the connections between inequality and collective action. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 117 (2007)
Issue (Month): 522 (07)
Pages: 922-935

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Handle: RePEc:ecj:econjl:v:117:y:2007:i:522:p:922-935

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Citations

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Cited by:
  1. Olivier Dagnelie, 2008. "Inequality and a Repeated Joint Project," Working Papers 344, Barcelona Graduate School of Economics.
  2. Cubel, Maria & Sanchez-Pages, Santiago, 2012. "The effect of within-group inequality in a conflict against a unitary threat," NEPS Working Papers 4/2012, Network of European Peace Scientists.
  3. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
  4. Münster, Johannes, 2008. "Group contest success functions," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-20, Social Science Research Center Berlin (WZB).
  5. Kolmar, Martin & Rommeswinkel, Hendrik, 2013. "Contests with group-specific public goods and complementarities in efforts," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 9-22.
  6. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  7. L. Bagnoli & G. Negroni, 2008. "The emergence of norms of cooperation in stag hunt games with production," Working Papers 626, Dipartimento Scienze Economiche, Universita' di Bologna.
  8. Martin Gregor & Lenka Stastna, 2012. "The decentralization tradeoff for complementary spillovers," Review of Economic Design, Springer, vol. 16(1), pages 41-69, March.
  9. Martin Gregor, 2011. "Tradeoffs of foreign assistance for the weakest-link global public goods," International Tax and Public Finance, Springer, vol. 18(2), pages 233-251, April.
  10. Uler, Neslihan, 2009. "Public goods provision and redistributive taxation," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 440-453, April.
  11. Johannes Münster, 2009. "Group contest success functions," Economic Theory, Springer, vol. 41(2), pages 345-357, November.

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