Alliances Among Asymmetric Countries
We examine alliances between asymmetric countries. We find that the results depend on the nature of the equilibrium. If the equilibrium is an interior one then, with an increase in asymmetry, the level of the alliance-wide defense good decreases and the divergence between the first best and the equilibrium level of the defense good increases. In the case where the equilibrium involves a corner solution, these results are reversed. It may be argued, however, that the interior equilibrium case is the more relevant one.
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Volume (Year): 18 (2007)
Issue (Month): 3 ()
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- Cornes, Richard & Hartley, Roger & Sandler, Todd, 1999.
"Equilibrium Existence and Uniqueness in Public Good Models: An Elementary Proof Via Contraction,"
Staff General Research Papers
1630, Iowa State University, Department of Economics.
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- Keith Hartley & Todd Sandler, 2001. "Economics of Alliances: The Lessons for Collective Action," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 869-896, September.
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