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Olson vs. Coase: coalitional worth in conflict



We analyze a model of conflict with endogenous choice of effort, where subsets of the contenders may force the resolution to be sequential: First the alliance fights it out with the rest and - in case they win - later they fight it out among themselves. For three-player games, we find that it will not be in the interest of any two of them to form an alliance. We obtain this result under two different scenarios: equidistant preferences with varying relative strengths, and vicinity of preferences with equal distribution of power. We conclude that the commonly made assumption of super-additive coalitional worth is suspect.

Suggested Citation

  • Joan Esteban & Jozsef Sakovics, 2002. "Olson vs. Coase: coalitional worth in conflict," ESE Discussion Papers 81, Edinburgh School of Economics, University of Edinburgh.
  • Handle: RePEc:edn:esedps:81

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    References listed on IDEAS

    1. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    2. Garfinkel, Michelle R., 2004. "Stable alliance formation in distributional conflict," European Journal of Political Economy, Elsevier, vol. 20(4), pages 829-852, November.
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    5. Noh, Suk Jae, 2002. "Resource distribution and stable alliances with endogenous sharing rules," European Journal of Political Economy, Elsevier, vol. 18(1), pages 129-151, March.
    6. Skaperdas, Stergios, 1998. "On the Formation of Alliances in Conflict and Contests," Public Choice, Springer, vol. 96(1-2), pages 25-42, July.
    7. Esteban, J. & Sakovics, J., 2000. "Temporary Alliance Formation: Endogenous Sequencing in Conflict Games," Papers 43, El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza.
    8. Francis Bloch & Santiago S?chez-Pag? & Raphael Soubeyran, "undated". "When does universal peace prevail? Secession and group formation in rent seeking contests and policy conflD72icts," UFAE and IAE Working Papers 543.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    9. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
    10. Baik, Kyung Hwan & Lee, Sanghack, 2001. "Strategic Groups and Rent Dissipation," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 672-684, October.
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    Cited by:

    1. Konrad, Kai A. & Kovenock, Dan, 2009. "The alliance formation puzzle and capacity constraints," Economics Letters, Elsevier, vol. 103(2), pages 84-86, May.
    2. Michael D. König & Dominic Rohner & Mathias Thoenig & Fabrizio Zilibotti, 2016. "The Long-lasting Shadow of the Allied Occupation of Austria on its Spatial Equilibrium," HiCN Working Papers 231, Households in Conflict Network.
    3. Ke, Changxia & Konrad, Kai A. & Morath, Florian, 2013. "Brothers in arms – An experiment on the alliance puzzle," Games and Economic Behavior, Elsevier, vol. 77(1), pages 61-76.
    4. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier.
    5. van Besouw, Bram & Ansink, Erik & van Bavel, Bas, 2016. "The economics of violence in natural states," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 139-156.
    6. Matija Kovacic & Claudio Zoli, 2013. "Ethnic Distribution, Effective Power and Conflict," Working Papers 294, ECINEQ, Society for the Study of Economic Inequality.
    7. Guofu Tan & Ruqu Wang, 2010. "Coalition formation in the presence of continuing conflict," International Journal of Game Theory, Springer;Game Theory Society, vol. 39(1), pages 273-299, March.
    8. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2015. "Endogenous group formation in experimental contests," European Economic Review, Elsevier, vol. 74(C), pages 163-189.
    9. Santiago Sánchez-Pagés, 2007. "Endogenous coalition formation in contests," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 139-163, September.
    10. repec:eee:poleco:v:49:y:2017:i:c:p:71-83 is not listed on IDEAS
    11. Deck, Cary & Foster, Joshua & Song, Hongwei, 2015. "Defense against an opportunistic challenger: Theory and experiments," European Journal of Operational Research, Elsevier, vol. 242(2), pages 501-513.
    12. Michelle R. Garfinkel, 2004. "On the Stability of Group Formation: Managing the Conflict Within," Conflict Management and Peace Science, Peace Science Society (International), vol. 21(1), pages 43-68, February.
    13. Kai Konrad, 2012. "Information alliances in contests with budget limits," Public Choice, Springer, vol. 151(3), pages 679-693, June.
    14. Changxia Ke, 2011. "Fight Alone or Together? The Need to Belong," Working Papers fight_alone_or_together, Max Planck Institute for Tax Law and Public Finance.
    15. Konrad, Kai A., 2007. "Strategy in contests: an introduction
      [Strategie in Turnieren – eine Einführung]
      ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).
    16. Francis Bloch, 2009. "Endogenous formation of alliances in conflicts," Working Papers hal-00435387, HAL.
    17. Christian Ewerhart, 2015. "Contest success functions: the common-pool perspective," ECON - Working Papers 195, Department of Economics - University of Zurich.
    18. David K Levine & Salvatore Modica, 2016. "Size, Fungibility, and the Strength of Lobbying Organizations," Levine's Working Paper Archive 786969000000001316, David K. Levine.
    19. Adam Smith & David Skarbek & Bart Wilson, 2012. "Anarchy, groups, and conflict: an experiment on the emergence of protective associations," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(2), pages 325-353, February.
    20. Franke, Jörg & Öztürk, Tahir, 2015. "Conflict networks," Journal of Public Economics, Elsevier, vol. 126(C), pages 104-113.
      • Franke, Jörg & Öztürk, Tahir, 2009. "Conflict Networks," Ruhr Economic Papers 116, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    21. Ray, Debraj & Vohra, Rajiv, 2015. "Coalition Formation," Handbook of Game Theory with Economic Applications, Elsevier.

    More about this item


    coalition formation; conflict; alliance;

    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

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