A dynamic model of conflict and appropriation
AbstractThis paper presents an extension of a static model of economic conflict analyzed by Hirshleifer (1991, 1995) and Skaperdas (1992) to an infinite horizon differential game. Our aim is to highlight the strategic role of appropriation among a smaller group of agents in an intertemporal context. The model yields the conclusion that there exists a unique linear/nonlinear Markov perfect equilibrium strategy, even when strategies are defined over the entire state space. We demonstrate that “partial cooperation” can be seen as a long-run response to conflict. Moreover, a decrease in the effectiveness of appropriation, the depreciation rate of a common-pool stock, the rate of time preferences or an increase in the “degree of noise” improves the degree of “partial cooperation” and thus welfare in an anarchic society.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 78 (2011)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/jebo
Conflict; Cooperation; Differential game; Markov perfect equilibrium; Nonlinear Markov strategy;
Other versions of this item:
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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