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When Growth leads to Zero-Sum Conflict

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  • Delgado-Vega, Alvaro
  • Lee, Barton

Abstract

Individuals often face a tradeoff between cooperating to expand a collective good (the “pie†) or competing to expand their share of it. We study this tradeoff as a dynamic public goods problem where the pie's size and its shares can only be gradually changed and contributions to the pie are irreversible. In the unique subgame perfect equilibrium, growth of pie occurs but halts at an inefficiently low level, at which point perpetual conflict over the shares ensues. Growth ultimately leads to a prisoner's dilemma stage game, but cooperation is unsustainable for any discount factor. We also explore the dynamics of growth and conflict and empirical relevance of our results.

Suggested Citation

  • Delgado-Vega, Alvaro & Lee, Barton, 2026. "When Growth leads to Zero-Sum Conflict," CEPR Discussion Papers 21010, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21010
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    File URL: https://cepr.org/publications/DP21010
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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General

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