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Olson vs. Coase: Coalitional Worth in Conflict

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  • Joan Mª Esteban
  • József Sákovics

Abstract

We analyze a model of conflict with endogenous choice of effort, where subsets of the contenders may force the resolution to be sequential: First the alliance fights it out with the rest and in case they win later they fight it out among themselves. For three-player games, we find that it will not be in the interest of any two of them to form an alliance. We obtain this result under two different scenarios: equidistant preferences with varying relative strengths, and vicinity of preferences with equal distribution of power. We conclude that the commonly made assumption of super-additive coalitional worth is suspect.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 3.

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Date of creation: Oct 2003
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Handle: RePEc:bge:wpaper:3

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Keywords: Coalition formation; conflict; alliance;

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References

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  1. Ray, D. & Vohra, R., 1996. "A Theory of Endogenous Coalition Structure," Papers, Boston University - Industry Studies Programme 68, Boston University - Industry Studies Programme.
  2. Yi, Sang-Seung & Shin, Hyukseung, 2000. "Endogenous formation of research coalitions with spillovers," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(2), pages 229-256, February.
  3. Skaperdas, Stergios, 1998. " On the Formation of Alliances in Conflict and Contests," Public Choice, Springer, Springer, vol. 96(1-2), pages 25-42, July.
  4. Greenberg, Joseph, 1994. "Coalition structures," Handbook of Game Theory with Economic Applications, Elsevier, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 37, pages 1305-1337 Elsevier.
  5. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, Elsevier, vol. 73(1), pages 30-78, March.
  6. Francis Bloch & Santiago Sánchez-Pagés & Raphaël Soubeyran, 2006. "When does universal peace prevail? Secession and group formation in conflict," Economics of Governance, Springer, Springer, vol. 7(1), pages 3-29, 01.
  7. Garfinkel, Michelle R., 2004. "Stable alliance formation in distributional conflict," European Journal of Political Economy, Elsevier, Elsevier, vol. 20(4), pages 829-852, November.
  8. Baik, Kyung Hwan & Lee, Sanghack, 2001. "Strategic Groups and Rent Dissipation," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 39(4), pages 672-84, October.
  9. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, Elsevier, vol. 87(2), pages 379-415, August.
  10. Noh, Suk Jae, 2002. "Resource distribution and stable alliances with endogenous sharing rules," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(1), pages 129-151, March.
  11. Esteban, J. & Sakovics, J., 2000. "Temporary Alliance Formation: Endogenous Sequencing in Conflict Games," Papers, El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza 43, El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza.
  12. Francis Bloch & Santiago S?chez-Pag? & Raphael Soubeyran, . "When does universal peace prevail? Secession and group formation in rent seeking contests and policy conflD72icts," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 543.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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Citations

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Cited by:
  1. Santiago Sánchez-Pagés, 2007. "Endogenous coalition formation in contests," Review of Economic Design, Springer, Springer, vol. 11(2), pages 139-163, September.
  2. Michelle R. Garfinkel, 2004. "On the Stability of Group Formation: Managing the Conflict Within," Conflict Management and Peace Science, Peace Science Society (International), Peace Science Society (International), vol. 21(1), pages 43-68, February.
  3. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, Springer, vol. 151(3), pages 679-693, June.
  4. Guofu Tan & Ruqu Wang, 2010. "Coalition formation in the presence of continuing conflict," International Journal of Game Theory, Springer, Springer, vol. 39(1), pages 273-299, March.
  5. Kai A. Konrad & Dan Kovenock, 2008. "The Alliance Formation Puzzle and Capacity Constraints," Purdue University Economics Working Papers 1209, Purdue University, Department of Economics.
  6. Adam C. Smith & David B. Skarbek & Bart J. Wilson, 2009. "Anarchy, Groups, and Conflict: An Experiment on the Emergence of Protective Associations," Working Papers, Chapman University, Economic Science Institute 09-03, Chapman University, Economic Science Institute.
  7. Changxia Ke, 2011. "Fight Alone or Together? The Need to Belong," Working Papers, Max Planck Institute for Tax Law and Public Finance fight_alone_or_together, Max Planck Institute for Tax Law and Public Finance.
  8. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier, Elsevier.
  9. Changxia Ke & Kai A. Konrad & Florian Morath, 2011. "Brothers in Arms - An Experiment on the Alliance Puzzle," Working Papers, Max Planck Institute for Tax Law and Public Finance brothers_in_arms, Max Planck Institute for Tax Law and Public Finance.
  10. Francis Bloch, 2009. "Endogenous formation of alliances in conflicts," Working Papers, HAL hal-00435387, HAL.
  11. Matija Kovacic & Claudio Zoli, 2013. "Ethnic Distribution, Effective Power and Conflict," Working Papers, ECINEQ, Society for the Study of Economic Inequality 294, ECINEQ, Society for the Study of Economic Inequality.
  12. Konrad, Kai A., 2007. "Strategy in contests: an introduction," Discussion Papers, Research Unit: Market Processes and Governance, Social Science Research Center Berlin (WZB) SP II 2007-01, Social Science Research Center Berlin (WZB).

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