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Inequality and Inefficiency in Joint Projects

  • Debraj Ray

    (NYU - New York University - New York University, IAE - Instituto de Analisis Economico - Consejo Superior de Investigaciones Cientificas)

  • Jean-Marie Baland

    (CRED - Centre de Recherche en Economie du Developpement - University of Namur)

  • Olivier Dagnelie

    ()

    (CRED - Centre de Recherche en Economie du Developpement - University of Namur)

A group of agents voluntarily participates in a joint project, in which efforts are not perfectly substitutable. The output is divided according to some given vector of shares. A share vector is unimprovable if no other share vector yields a higher sum of payoffs. When the elasticity of substitution across efforts is two or lower, only the perfectly equal share vector is unimprovable, and all other vectors can be improved via Lorenz domination. For higher elasticities of substitution, perfect equality is no longer unimprovable. Our results throw light on the connections between inequality and collective action.

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Paper provided by HAL in its series Post-Print with number halshs-00160753.

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Date of creation: Jul 2007
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Publication status: Published, The Economic Journal, 2007, 117, 522, 922-935
Handle: RePEc:hal:journl:halshs-00160753
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00160753/en/
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  1. Nandeibam, Shasikanta, 2002. "Sharing Rules in Teams," Journal of Economic Theory, Elsevier, vol. 107(2), pages 407-420, December.
  2. Patrick Legros & Steven A. Matthews, 1992. "Efficient and Nearly Efficient Partnerships," Discussion Papers 991R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  9. Dayton-Johnson, Jeff, 2000. "Determinants of collective action on the local commons: a model with evidence from Mexico," Journal of Development Economics, Elsevier, vol. 62(1), pages 181-208, June.
  10. Debraj Ray & Kaoru Ueda, 1996. "Egalitarianism and Incentives," Boston University - Institute for Economic Development 73, Boston University, Institute for Economic Development.
  11. Sandler, Todd & Forbes, John F, 1980. "Burden Sharing, Strategy, and the Design of NATO," Economic Inquiry, Western Economic Association International, vol. 18(3), pages 425-44, July.
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  13. Cornes, Richard, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 259-71, February.
  14. Baland, Jean-Marie & Platteau, Jean-Philippe, 2003. "Economics of common property management regimes," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 4, pages 127-190 Elsevier.
  15. Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
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