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The problem of maintaining compliance within stable coalitions: experimental evidence

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  • David M. McEvoy
  • James J. Murphy
  • John M. Spraggon
  • John K. Stranlund

Abstract

This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to violate their commitments. A stable coalition is one in which no member wishes to leave and no non-member wishes to join. To counteract the incentive to violate their commitments, coalition members fund a third-party enforcer. This leads to the theoretical conclusion that stable coalitions are larger, and provide more of a public good, when their members are responsible for financing enforcement. However, our experiments reveal that member-financed enforcement of compliance reduces the provision of the public good. The decrease is attributed to an increase in the participation threshold for a stable coalition to form and to significant levels of noncompliance. Provision of the public good increases significantly when we abandon the strict stability conditions and require all subjects to join a coalition for it to form. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 63 (2011)
Issue (Month): 3 (July)
Pages: 475-498

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Handle: RePEc:oup:oxecpp:v:63:y:2011:i:3:p:475-498

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  1. Effrosyni Diamantoudi, 2005. "Stable cartels revisited," Economic Theory, Springer, Springer, vol. 26(4), pages 907-921, November.
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  7. David McEvoy & John Stranlund, 2009. "Self-enforcing International Environmental Agreements with Costly Monitoring for Compliance," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 42(4), pages 491-508, April.
  8. David Cooper & Carol Stockman, 2002. "Learning to Punish: Experimental Evidence from a Sequential Step-Level Public Goods Game," Experimental Economics, Springer, Springer, vol. 5(1), pages 39-51, June.
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Cited by:
  1. Astrid Dannenberg & Andreas Lange & Bodo Sturm, 2010. "On the Formation of Coalitions to Provide Public Goods - Experimental Evidence from the Lab," NBER Working Papers 15967, National Bureau of Economic Research, Inc.
  2. Leo Wangler & Juan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2013. "The political economy of international environmental agreements: a survey," International Environmental Agreements: Politics, Law and Economics, Springer, Springer, vol. 13(3), pages 387-403, September.
  3. David M. McEvoy & Todd L. Cherry & John K. Stranlund, 2011. "The Endogenous Formation of Coalitions to Provide Public Goods: Theory and Experimental Evidence," Working Papers, University of Massachusetts Amherst, Department of Resource Economics 2011-2, University of Massachusetts Amherst, Department of Resource Economics.
  4. David McEvoy & Michael Jones & Michael McKee & John Talberth, 2013. "Incentivizing Cooperative Agreements for Sustainable Forest Management: Experimental Tests of Alternative Structures and Institutional Rules," Working Papers, Department of Economics, Appalachian State University 13-23, Department of Economics, Appalachian State University.
  5. Todd Cherry & David McEvoy, 2013. "Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 54(1), pages 63-77, January.

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