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A DynamicModel of Conflict and Appropriation

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  • Wolfgang Eggert

    ()
    (University of Freiburg)

  • Jun-ichi Itaya

    ()
    (Graduate School of Economics and Business Admministration, Hokkaido University)

  • Kazuo Mino

    ()
    (Institute of Economic Research, Kyoto University)

Abstract

This paper conducts the analysis of conflict and appropriation by extending the static contest models such as Hirshleifer (1991, 1995) and Skaperdas (1992) to a continuoustime, differential game setting. This paper shows that there is a unique Markov perfect equilibrium (MPE) strategy, which may be linear or nonlinear depending on the structural parameters of the model, when strategies are defined over the entire state space. We show that 'partial cooperation' can be seen as a long-run response to conflict. In particular, we find that a decrease in the effectiveness of appropriation, the depreciation rate of a common-pool stock which is subject to appropriation or the rate of time preferences or an increase in the 'degree of noise' improves the degree of 'partial cooperation' and thus the welfare of an anarchic society in the long run.

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File URL: http://www.kier.kyoto-u.ac.jp/DP/DP733.pdf
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Bibliographic Info

Paper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 733.

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Length: 34pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:kyo:wpaper:733

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Keywords: Conflict; Cooperation; Differential Game; Markov Perfect Equilibrium; Nonlinear Markov strategy;

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References

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  1. Skaperdas, S., 1991. "Cooperation, Conflict And Power In The Absence Of Property Rights," Papers 90-91-06a, California Irvine - School of Social Sciences.
  2. J. Amegashie, 2006. "A contest success function with a tractable noise parameter," Public Choice, Springer, vol. 126(1), pages 135-144, January.
  3. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer, vol. 7(2), pages 283-290.
  4. Skaperdas, Stergios & Syropoulos, Constantinos, 1996. "Can the shadow of the future harm cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 29(3), pages 355-372, May.
  5. Birendra Rai & Rajiv Sarin, 2009. "Generalized contest success functions," Economic Theory, Springer, vol. 40(1), pages 139-149, July.
  6. Itaya, Jun-ichi & Shimomura, Koji, 2001. "A dynamic conjectural variations model in the private provision of public goods: a differential game approach," Journal of Public Economics, Elsevier, vol. 81(1), pages 153-172, July.
  7. Garfinkel, Michelle R, 1990. "Arming as a Strategic Investment in a Cooperative Equilibrium," American Economic Review, American Economic Association, vol. 80(1), pages 50-68, March.
  8. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
  9. John W. Maxwell & Rafael Reuveny, 2004. "Continuing Conflict," Working Papers 2004-27, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  10. Tsutsui, Shunichi & Mino, Kazuo, 1990. "Nonlinear strategies in dynamic duopolistic competition with sticky prices," Journal of Economic Theory, Elsevier, vol. 52(1), pages 136-161, October.
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  13. Catherine Hafer, 2006. "On the Origins of Property Rights: Conflict and Productionin the State of Nature," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 119-143.
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  17. Jack Hirshleifer, 1991. "The Paradox Of Power," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 177-200, November.
  18. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, October.
  19. Dockner Engelbert J. & Van Long Ngo, 1993. "International Pollution Control: Cooperative versus Noncooperative Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 13-29, July.
  20. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February.
  21. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
  22. Gradstein, Mark, 2004. "Governance and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 505-518, April.
  23. Gonzalez, Francisco M., 2007. "Effective property rights, conflict and growth," Journal of Economic Theory, Elsevier, vol. 137(1), pages 127-139, November.
  24. Neary, Hugh M, 1997. "Equilibrium Structure in an Economic Model of Conflict," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 480-94, July.
  25. Gradstein, Mark, 2002. "Governance and Growth," CEPR Discussion Papers 3270, C.E.P.R. Discussion Papers.
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