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Fostering Cooperation: The Conflict-Reducing Effects of Intervillage Competition for Government Transfers

Author

Listed:
  • Teevrat Garg
  • Caterina Gennaioli
  • Stefania Lovo
  • Gregor Singer

Abstract

We examine the effect of intergroup competition on within-group violent conflict in Indonesia. Using a triple-differences design, we find that higher competition for national government transfers between villages reduces within-village conflict. These effects persist regardless of the competition's outcome, are stronger in ethnically fractionalized and segregated villages, and are accompanied by higher attendance in village meetings. Our results are consistent with external competition favoring participation and cooperation within otherwise divided communities, suggesting that economic incentives to compete with out-groups combined with forms of civic engagement can be important mechanisms to reduce violence within communities.

Suggested Citation

  • Teevrat Garg & Caterina Gennaioli & Stefania Lovo & Gregor Singer, 2026. "Fostering Cooperation: The Conflict-Reducing Effects of Intervillage Competition for Government Transfers," American Economic Journal: Applied Economics, American Economic Association, vol. 18(3), pages 283-321, July.
    • Handle: RePEc:aea:aejapp:v:18:y:2026:i:3:p:283-321
    DOI: 10.1257/app.20240377
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    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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