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The Alliance Formation Puzzle and Capacity Constraints

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  • Kai A. Konrad
  • Dan Kovenock

Abstract

The formation of an alliance in conflict situations is known to suffer from a collective action problem and from the potential of internal conflict. We show that budget constraints of an intermediate size can overcome this strong disadvantage and explain the formation of alliances.

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Bibliographic Info

Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1209.

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Length: 8 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:pur:prukra:1209

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Keywords: alliance formation puzzle; military conflict; budget constraints;

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References

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  1. Alcalde, José & Dahm, Matthias, 2008. "All-pay auction equilibria in contests," Working Papers 2072/5368, Universitat Rovira i Virgili, Department of Economics.
  2. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, 03.
  3. Joan Esteban & Jozsef Sakovics, 2004. "Olson vs. Coase: coalitional worth in conflict," ESE Discussion Papers 81, Edinburgh School of Economics, University of Edinburgh.
  4. Che, Yeon-Koo & Gale, Ian, 1997. " Rent Dissipation When Rent Seekers Are Budget Constrained," Public Choice, Springer, vol. 92(1-2), pages 109-26, July.
  5. Baye, M.R. & Kovenock, D. & De Vries, C., 1992. "The All-Pay Auction with Complete Information," Papers 8-92-1, Pennsylvania State - Department of Economics.
  6. Skaperdas, Stergios, 1998. " On the Formation of Alliances in Conflict and Contests," Public Choice, Springer, vol. 96(1-2), pages 25-42, July.
  7. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
  8. Katz, Eliakim & Tokatlidu, Julia, 1996. "Group competition for rents," European Journal of Political Economy, Elsevier, vol. 12(4), pages 599-607, December.
  9. Konrad, Kai A & Leininger, Wolfgang, 2007. "Self-enforcing Norms and the Efficient Non-cooperative Organization of Clans," CEPR Discussion Papers 6333, C.E.P.R. Discussion Papers.
  10. Michelle R. Garfinkel, 2003. "On the Stability of Group Formation: Managing the Conflict Within," Public Economics 0312005, EconWPA, revised 04 Mar 2004.
  11. Dan Kovenock & Brian Roberson, 2007. "Coalitional Colonel Blotto Games with Application to the Economics of Alliances," Purdue University Economics Working Papers 1207, Purdue University, Department of Economics.
  12. Harris, Christopher & Reny, Philip & Robson, Arthur, 1995. "The Existence of Subgame-Perfect Equilibrium in Continuous Games with Almost Perfect Information: A Case for Public Randomization," Econometrica, Econometric Society, vol. 63(3), pages 507-44, May.
  13. Warneryd, Karl, 1998. "Distributional conflict and jurisdictional organization," Journal of Public Economics, Elsevier, vol. 69(3), pages 435-450, September.
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Citations

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Cited by:
  1. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2013. "Endogenous group formation in experimental contests," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 419, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, vol. 151(3), pages 679-693, June.
  3. Konrad, Kai A., 2010. "Dynamic contests," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2010-10, Social Science Research Center Berlin (WZB).
  4. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2013. "Endogenous group formation in experimental contests," Discussion Papers, Research Unit: Economics of Change SP II 2013-301, Social Science Research Center Berlin (WZB).
  5. Changxia Ke & Kai A. Konrad & Florian Morath, 2011. "Brothers in Arms - An Experiment on the Alliance Puzzle," Working Papers brothers_in_arms, Max Planck Institute for Tax Law and Public Finance.
  6. Ke, Changxia, 2013. "Fight Alone or Together? The Need to Belong," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 421, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  7. Konrad, Kai A., 2011. "Strategic aspects of fighting in alliances," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2011-105, Social Science Research Center Berlin (WZB).

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