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Inequality and a Repeated Joint Project

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Agents voluntarily contribute to an infinitely repeated joint project. We investigate the conditions for cooperation to be a renegotiation-proof and coalition-proof equilibrium before examining the influence of output share inequality on the sustainability of cooperation. When shares are not equally distributed, cooperation requires agents to be more patient than under perfect equality. Beyond a certain degree of share inequality, full efficiency cannot be reached without redistribution. This model also explains the coexistence of one cooperating and one free-riding coalition. In this case, increasing inequality can have a positive or negative impact on the aggregate level of effort.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 740.08.

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Length: 28
Date of creation: 10 May 2008
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Handle: RePEc:aub:autbar:740.08

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  1. Dayton-Johnson, Jeff, 2000. "Determinants of collective action on the local commons: a model with evidence from Mexico," Journal of Development Economics, Elsevier, vol. 62(1), pages 181-208, June.
  2. Debraj Ray & Jean-Marie Baland & Olivier Dagnelie, 2007. "Inequality and Inefficiency in Joint Projects," Post-Print halshs-00160753, HAL.
  3. Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
  4. Baland, Jean-Marie & Platteau, Jean-Philippe, 2003. "Economics of common property management regimes," Handbook of Environmental Economics, Elsevier, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 4, pages 127-190 Elsevier.
  5. Olivier Dagnelie, 2008. "Inequality and a Repeated Joint Project," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 740.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  6. Bardhan, Pranab & Ghatak, Maitreesh & Karaivanov, Alexander, 2007. "Wealth inequality and collective action," Journal of Public Economics, Elsevier, vol. 91(9), pages 1843-1874, September.
  7. Helder Vasconcelos, 2005. "Tacit Collusion, Cost Asymmetries, and Mergers," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 39-62, Spring.
  8. Tarui, Nori, 2007. "Inequality and outside options in common-property resource use," Journal of Development Economics, Elsevier, vol. 83(1), pages 214-239, May.
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Cited by:
  1. Olivier Dagnelie, 2008. "Inequality and a Repeated Joint Project," Working Papers 344, Barcelona Graduate School of Economics.

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