Anarchy, Monopoly, and Predation
Although institutions rooted in the folk theorem can support self-enforcing exchange in a wide variety of contexts, their potential to create cooperation is not limitless. In particular, the folk theorem may break down when some agents are physically stronger than others. I demonstrate this in the context of Stringham's  vertically integrated proprietary communities. In this system a monopoly proprietor maximizes profits by optimally extorting his tenants in violation of voluntary contracts. The result is a predatory rather than voluntary regime.
Volume (Year): 163 (2007)
Issue (Month): 3 (September)
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