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Inequality and Inefficiency in Joint Projects

Author

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  • Debraj Ray
  • Jean-Marie Baland
  • Olivier Dagnelie

Abstract

A group of agents voluntarily participates in a joint project, in which efforts are not perfectly substitutable. The output is divided according to some given vector of shares. A share vector is "unimprovable" if no other share vector yields a higher sum of payoffs. When the elasticity of substitution across efforts is two or lower, only the perfectly equal share vector is unimprovable, and all other vectors can be improved via Lorenz domination. For higher elasticities of substitution, perfect equality is no longer unimprovable. Our results throw light on the connections between inequality and collective action. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Suggested Citation

  • Debraj Ray & Jean-Marie Baland & Olivier Dagnelie, 2007. "Inequality and Inefficiency in Joint Projects," Economic Journal, Royal Economic Society, vol. 117(522), pages 922-935, July.
    • Handle: RePEc:ecj:econjl:v:117:y:2007:i:522:p:922-935
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    4. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    5. Olivier Dagnelie, 2008. "Inequality and a Repeated Joint Project," Working Papers 344, Barcelona School of Economics.
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    9. Batabyal, Amitrajeet A. & Nijkamp, Peter, 2016. "Creative capital in production, inefficiency, and inequality: A theoretical analysis," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 553-558.
    10. Yongming Wang & Irfan Uddin & Yingmei Gong, 2021. "Nexus between Natural Resources and Environmental Degradation: Analysing the Role of Income Inequality and Renewable Energy," Sustainability, MDPI, vol. 13(15), pages 1-20, July.
    11. Matthew McGinty, 2014. "Strategic Incentives in Teams: Implications of Returns to Scale," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 474-488, October.
    12. Cheikbossian, Guillaume & Fayat, Romain, 2018. "Group size, collective action and complementarities in efforts," Economics Letters, Elsevier, vol. 168(C), pages 77-81.
    13. Sahuguet, Nicolas & Crutzen, Benoît SY & Flamand, Sabine, 2017. "Prize allocation and incentives in team contests," CEPR Discussion Papers 12493, C.E.P.R. Discussion Papers.
    14. L. Bagnoli & G. Negroni, 2008. "The emergence of norms of cooperation in stag hunt games with production," Working Papers 626, Dipartimento Scienze Economiche, Universita' di Bologna.
    15. Crutzen, Benoît S Y & Flamand, Sabine & Sahuguet, Nicolas, 2020. "A model of a team contest, with an application to incentives under list proportional representation," Journal of Public Economics, Elsevier, vol. 182(C).
    16. Stefano Barbieri, 2023. "Complementarity and information in collective action," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(1), pages 167-206, January.
    17. Münster, Johannes, 2008. "Group contest success functions [Group Contest Success Functions]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-20, WZB Berlin Social Science Center.
    18. De Jaegher, Kris, 2017. "Harsh environments and the evolution of multi-player cooperation," Theoretical Population Biology, Elsevier, vol. 113(C), pages 1-12.
    19. Kolmar, Martin & Rommeswinkel, Hendrik, 2013. "Contests with group-specific public goods and complementarities in efforts," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 9-22.
    20. Martin Gregor, 2011. "Tradeoffs of foreign assistance for the weakest-link global public goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(2), pages 233-251, April.
    21. Uler, Neslihan, 2009. "Public goods provision and redistributive taxation," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 440-453, April.
    22. Barbieri, Stefano, 2017. "Voluntary public good provision with private information using order statistics," Economics Letters, Elsevier, vol. 150(C), pages 63-66.
    23. Guglielmo D’Amico & Giuseppe Di Biase & Raimondo Manca, 2015. "Measuring Income Inequality: An Application Of The Population Dynamic Theil'S Entropy," Accounting & Taxation, The Institute for Business and Finance Research, vol. 7(1), pages 103-114.
    24. Johannes Münster, 2009. "Group contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(2), pages 345-357, November.
    25. Marchiori, Carmen, 2014. "Inequality and rules in the governance of water resources," Ecological Economics, Elsevier, vol. 105(C), pages 124-129.

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