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Networks, law, and the paradox of cooperation

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  • Caplan, Bryan
  • Stringham, Edward

Abstract

There is a tension between libertarians’ optimism about private supply of public goods and skepticism of the viability of voluntary collusion (Cowen 1992, Cowen and Sutter 1999). Playing off this asymmetry, Cowen (1992) advances the novel argument that the “free market in defense services” favored by anarcho-capitalists is a network industry where collusion is especially feasible. The current article dissolves Cowen’s asymmetry, showing that he fails to distinguish between self-enforcing and non-self-enforcing interaction. Case study evidence on network behavior before and after antitrust supports our analysis. Furthermore, libertarians’ joint beliefs on public goods and collusion are, contrary to Cowen and Sutter (1999), theoretically defensible.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26086.

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Date of creation: 2003
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Publication status: Published in Review of Austrian Economics 4.16(2003): pp. 309-326
Handle: RePEc:pra:mprapa:26086

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Keywords: networks; anarcho-Capitalism; collusion;

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Citations

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Cited by:
  1. Edward Stringham, 2002. "The Emergence of the London Stock Exchange as a Self-Policing Club," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 17(Spring 20), pages 1-19.
  2. Rogers, Douglas B. & Smith, Adam C. & Wilson, Bart J., 2013. "Violence, access, and competition in the market for protection," European Journal of Political Economy, Elsevier, Elsevier, vol. 29(C), pages 1-17.
  3. Benjamin Powell & Edward Stringham, 2009. "Public choice and the economic analysis of anarchy: a survey," Public Choice, Springer, Springer, vol. 140(3), pages 503-538, September.
  4. Benjamin Powell, 2008. "Alain Marciano and Jean-Michel Josselin (eds.): Democracy, Freedom, and Coercion: A Law and Economics Approach," Public Choice, Springer, Springer, vol. 136(1), pages 249-251, July.
  5. Edward Stringham & Caleb Miles, 2012. "Repelling states: Evidence from upland Southeast Asia," The Review of Austrian Economics, Springer, Springer, vol. 25(1), pages 17-33, March.
  6. Adam Smith & David Skarbek & Bart Wilson, 2012. "Anarchy, groups, and conflict: an experiment on the emergence of protective associations," Social Choice and Welfare, Springer, Springer, vol. 38(2), pages 325-353, February.
  7. Powell, Benjamin & Wilson, Bart J., 2008. "An experimental investigation of Hobbesian jungles," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 66(3-4), pages 669-686, June.

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