A Note on Within-group Cooperation and Between-group Interaction in the Private Provision of Public Goods
AbstractUsing a simple two-group model of the private provision of public goods, this paper investigates how endogenous formation of within-group cooperation is affected by different types and degrees of between-group interactions. We show that when between-group interactions are of the same directions and weak (strong), within-group cooperation for providing public goods will (will not) occur in each group for strategic reasons. On the other hand, when between-group interactions are of the opposite directions or unidirectional, within-group cooperation will necessarily occur. In addition, endogenous formation of cooperation is independent of absolute (individual) levels of income as well as income distribution between agents, which corresponds to an extended version of Warr's neutrality theorem. We also show whether endogenous formation of within-group cooperation is beneficial or harmful to each group crucially depends on the degree of between-group interactions. The variation in the interaction degree leads to three different types of games concerning welfare consequences: the Prisoners' Dilemma, Coordination Game, and Invisible Hand.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 32045.
Date of creation: 06 Jul 2011
Date of revision:
Private provision; Public goods; Cooperation;
Find related papers by JEL classification:
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-13 (All new papers)
- NEP-EVO-2011-07-13 (Evolutionary Economics)
- NEP-SOC-2011-07-13 (Social Norms & Social Capital)
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