The problem of maintaining compliance within stable coalitions: experimental evidence
This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to violate their commitments. A stable coalition is one in which no member wishes to leave and no non-member wishes to join. To counteract the incentive to violate their commitments, coalition members fund a third-party enforcer. This leads to the theoretical conclusion that stable coalitions are larger, and provide more of a public good, when their members are responsible for financing enforcement. However, our experiments reveal that member-financed enforcement of compliance reduces the provision of the public good. The decrease is attributed to an increase in the participation threshold for a stable coalition to form and to significant levels of noncompliance. Provision of the public good increases significantly when we abandon the strict stability conditions and require all subjects to join a coalition for it to form. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.
Volume (Year): 63 (2011)
Issue (Month): 3 (July)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Santiago J. Rubio & Alistair Ulph, 2006.
"Self-enforcing international environmental agreements revisited,"
Oxford Economic Papers,
Oxford University Press, vol. 58(2), pages 233-263, April.
- Alistair Ulph & Santiago J. Rubio, 2004. "Self-Enforcing International Environmental Agreements Revisited," Working Papers. Serie AD 2004-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Na Li Dawson & Kathleen Segerson, 2003.
"Voluntary Agreements with Industries: Participation Incentives with Industry-wide Targets,"
2004-06, University of Connecticut, Department of Economics.
- Na Li Dawson & Kathleen Segerson, 2008. "Voluntary Agreements with Industries: Participation Incentives with Industry-Wide Targets," Land Economics, University of Wisconsin Press, vol. 84(1), pages 97-114.
- Cadsby, Charles Bram & Maynes, Elizabeth, 1999. "Voluntary provision of threshold public goods with continuous contributions: experimental evidence," Journal of Public Economics, Elsevier, vol. 71(1), pages 53-73, January.
- Vasconcelos, Helder, 2006. "Endogenous mergers in endogenous sunk cost industries," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 227-250, March.
- Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
- Santiago Rubio & Alistair Ulph, 2003.
"An Infinite-Horizon Model of Dynamic Membership of International Environmental Agreements,"
2003.57, Fondazione Eni Enrico Mattei.
- Rubio, Santiago J. & Ulph, Alistair, 2007. "An infinite-horizon model of dynamic membership of international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 54(3), pages 296-310, November.
- Rubio, S. J. & Ulph, A., 2002. "An infinite-horizon model of dynamic membership of international environmental agreements," Discussion Paper Series In Economics And Econometrics 0210, Economics Division, School of Social Sciences, University of Southampton.
- Marks, Melanie & Croson, Rachel, 1998. "Alternative rebate rules in the provision of a threshold public good: An experimental investigation," Journal of Public Economics, Elsevier, vol. 67(2), pages 195-220, February.
- David M. McEvoy, 2009.
"Not It: Opting out of Voluntary Coalitions that Provide a Public Good,"
09-14, Department of Economics, Appalachian State University.
- David McEvoy, 2010. "Not it: opting out of voluntary coalitions that provide a public good," Public Choice, Springer, vol. 142(1), pages 9-23, January.
- R. Isaac & David Schmidtz & James Walker, 1989. "The assurance problem in a laboratory market," Public Choice, Springer, vol. 62(3), pages 217-236, September.
- Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983.
"On the Stability of Collusive Price Leadership,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 16(1), pages 17-25, February.
- Kolstad, Charles D., 2007. "Systematic uncertainty in self-enforcing international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 68-79, January.
- Alistair Ulph, 2004. "Stable International Environmental Agreements with a Stock Pollutant, Uncertainty and Learning," Journal of Risk and Uncertainty, Springer, vol. 29(1), pages 53-73, 07.
- Carraro, Carlo & Siniscalco, Domenico, 1991.
"Strategies for the International Protection of the Environment,"
CEPR Discussion Papers
568, C.E.P.R. Discussion Papers.
- Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
- Matthew McGinty, 2007. "International environmental agreements among asymmetric nations," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 45-62, January.
- David McEvoy & John Stranlund, 2009. "Self-enforcing International Environmental Agreements with Costly Monitoring for Compliance," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(4), pages 491-508, April.
- David Cooper & Carol Stockman, 2002. "Learning to Punish: Experimental Evidence from a Sequential Step-Level Public Goods Game," Experimental Economics, Springer, vol. 5(1), pages 39-51, June.
- Effrosyni Diamantoudi, 2005. "Stable cartels revisited," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 907-921, November.
- Bagnoli, Mark & McKee, Michael, 1991. "Voluntary Contribution Games: Efficient Private Provision of Public Goods," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 351-66, April.
When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:63:y:2011:i:3:p:475-498. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.