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A DynamicModel of Conflict and Appropriation

  • Wolfgang Eggert

    ()

    (University of Freiburg)

  • Jun-ichi Itaya

    ()

    (Graduate School of Economics and Business Admministration, Hokkaido University)

  • Kazuo Mino

    ()

    (Institute of Economic Research, Kyoto University)

This paper conducts the analysis of conflict and appropriation by extending the static contest models such as Hirshleifer (1991, 1995) and Skaperdas (1992) to a continuoustime, differential game setting. This paper shows that there is a unique Markov perfect equilibrium (MPE) strategy, which may be linear or nonlinear depending on the structural parameters of the model, when strategies are defined over the entire state space. We show that 'partial cooperation' can be seen as a long-run response to conflict. In particular, we find that a decrease in the effectiveness of appropriation, the depreciation rate of a common-pool stock which is subject to appropriation or the rate of time preferences or an increase in the 'degree of noise' improves the degree of 'partial cooperation' and thus the welfare of an anarchic society in the long run.

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File URL: http://www.kier.kyoto-u.ac.jp/DP/DP733.pdf
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Paper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 733.

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Length: 34pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:kyo:wpaper:733
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  1. Mino, Kazuo, 1983. "On the homogeneity of value function of the optimal control problem," Economics Letters, Elsevier, vol. 11(1-2), pages 149-154.
  2. Dasgupta, Ani & Nti, Kofi O., 1998. "Designing an optimal contest," European Journal of Political Economy, Elsevier, vol. 14(4), pages 587-603, November.
  3. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1275-88, December.
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  7. Birendra Rai & Rajiv Sarin, 2009. "Generalized contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(1), pages 139-149, July.
  8. Rubio, Santiago J. & Casino, Begona, 2002. "A note on cooperative versus non-cooperative strategies in international pollution control," Resource and Energy Economics, Elsevier, vol. 24(3), pages 251-261, June.
  9. John W. Maxwell & Rafael Reuveny, 2004. "Continuing Conflict," Working Papers 2004-27, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  10. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
  11. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February.
  12. Garfinkel, Michelle R, 1990. "Arming as a Strategic Investment in a Cooperative Equilibrium," American Economic Review, American Economic Association, vol. 80(1), pages 50-68, March.
  13. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
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  15. Skaperdas, Stergios & Syropoulos, Constantinos, 1996. "Can the shadow of the future harm cooperation?," Journal of Economic Behavior & Organization, Elsevier, vol. 29(3), pages 355-372, May.
  16. Jun-ichi Itaya & Koji Shimomura, 1999. "A Dynamic Conjectural Variations Model in the Private Provision of Public Goods: a Differential Game Approach," Discussion Paper Series 104, Research Institute for Economics & Business Administration, Kobe University.
  17. Jack Hirshleifer, 1991. "The Paradox Of Power," Economics and Politics, Wiley Blackwell, vol. 3(3), pages 177-200, November.
  18. Gradstein, Mark, 2004. "Governance and growth," Journal of Development Economics, Elsevier, vol. 73(2), pages 505-518, April.
  19. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, Junio.
  20. Neary, Hugh M, 1997. "Equilibrium Structure in an Economic Model of Conflict," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 480-94, July.
  21. Tsutsui, Shunichi & Mino, Kazuo, 1990. "Nonlinear strategies in dynamic duopolistic competition with sticky prices," Journal of Economic Theory, Elsevier, vol. 52(1), pages 136-161, October.
  22. Gradstein, Mark, 2002. "Governance and Growth," CEPR Discussion Papers 3270, C.E.P.R. Discussion Papers.
  23. Van Long, Ngo & Shimomura, Koji, 1998. "Some results on the Markov equilibria of a class of homogeneous differential games," Journal of Economic Behavior & Organization, Elsevier, vol. 33(3-4), pages 557-566, January.
  24. Benhabib, Jess & Radner, Roy, 1992. "The Joint Exploitation of a Productive Asset: A Game-Theoretic Approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(2), pages 155-90, April.
  25. Catherine Hafer, 2006. "On the Origins of Property Rights: Conflict and Productionin the State of Nature," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 119-143.
  26. Dockner Engelbert J. & Van Long Ngo, 1993. "International Pollution Control: Cooperative versus Noncooperative Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 13-29, July.
  27. Corchon, Luis C, 2000. " On the Allocative Effects of Rent Seeking," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(4), pages 483-91.
  28. Skaperdas, Stergios, 1992. "Cooperation, Conflict, and Power in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 82(4), pages 720-39, September.
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