IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/26086.html
   My bibliography  Save this paper

Networks, law, and the paradox of cooperation

Author

Listed:
  • Caplan, Bryan
  • Stringham, Edward

Abstract

There is a tension between libertarians’ optimism about private supply of public goods and skepticism of the viability of voluntary collusion (Cowen 1992, Cowen and Sutter 1999). Playing off this asymmetry, Cowen (1992) advances the novel argument that the “free market in defense services” favored by anarcho-capitalists is a network industry where collusion is especially feasible. The current article dissolves Cowen’s asymmetry, showing that he fails to distinguish between self-enforcing and non-self-enforcing interaction. Case study evidence on network behavior before and after antitrust supports our analysis. Furthermore, libertarians’ joint beliefs on public goods and collusion are, contrary to Cowen and Sutter (1999), theoretically defensible.

Suggested Citation

  • Caplan, Bryan & Stringham, Edward, 2003. "Networks, law, and the paradox of cooperation," MPRA Paper 26086, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:26086
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/26086/1/MPRA_paper_26086.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Benson, Bruce L, 1993. "The Impetus for Recognizing Private Property and Adopting Ethical Behavior in a Market Economy: Natural Law, Government Law, or Evolving Self-Interest," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 6(2), pages 43-80.
    2. Edward Stringham, 2002. "The Emergence of the London Stock Exchange as a Self-Policing Club," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 17(Spring 20), pages 1-19.
    3. Deepak Lal, 1997. "From Planning to Regulation: Towards a New Dirigisme?," UCLA Economics Working Papers 774A, UCLA Department of Economics.
    4. Stringham, Edward, 2003. "The extralegal development of securities trading in seventeenth-century Amsterdam," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(2), pages 321-344.
    5. Klein, Daniel B, 1990. "The Voluntary Provision of Public Goods? The Turnpike Companies of Early America," Economic Inquiry, Western Economic Association International, vol. 28(4), pages 788-812, October.
    6. Gorton, Gary, 1985. "Clearinghouses and the Origin of Central Banking in the United States," The Journal of Economic History, Cambridge University Press, vol. 45(02), pages 277-283, June.
    7. B. Douglas Bernheim & Michael D. Whinston, 1985. "Common Marketing Agency as a Device for Facilitating Collusion," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 269-281, Summer.
    8. Dowd, Kevin, 1994. "Competitive Banking, Bankers' Clubs, and Bank Regulation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(2), pages 289-308, May.
    9. Timberlake, Richard H, Jr, 1984. "The Central Banking Role of Clearinghouse Associations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(1), pages 1-15, February.
    10. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
    11. Libecap, Gary D & Wiggins, Steven N, 1984. "Contractual Responses to the Common Pool: Prorationing of Crude Oil Production," American Economic Review, American Economic Association, vol. 74(1), pages 87-98, March.
    12. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
    13. S. J. Liebowitz & Stephen E. Margolis, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-150, Spring.
    14. Cowen, Tyler, 1992. "Law as a Public Good: The Economics of Anarchy," Economics and Philosophy, Cambridge University Press, vol. 8(02), pages 249-267, October.
    15. William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March.
    16. Veitch, John M., 1986. "Repudiations and Confiscations by the Medieval State," The Journal of Economic History, Cambridge University Press, vol. 46(01), pages 31-36, March.
    17. Cowen, Tyler, 1994. "Rejoinder to David Friedman on the Economics of Anarchy," Economics and Philosophy, Cambridge University Press, vol. 10(02), pages 329-332, October.
    18. Charles Goodhart, 1988. "The Evolution of Central Banks," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570734, January.
    19. Telser, L G, 1980. "A Theory of Self-enforcing Agreements," The Journal of Business, University of Chicago Press, vol. 53(1), pages 27-44, January.
    20. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    21. Steven C. Salop & Lawrence J. White, 1991. "Policy Watch: Antitrust Goes to College," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 193-202, Summer.
    22. Gabel, David, 1994. "Competition in a Network Industry: The Telephone Industry, 1894–1910," The Journal of Economic History, Cambridge University Press, vol. 54(03), pages 543-572, September.
    23. Calomiris, Charles W & Kahn, Charles M, 1991. "The Role of Demandable Debt in Structuring Optimal Banking Arrangements," American Economic Review, American Economic Association, vol. 81(3), pages 497-513, June.
    24. Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, vol. 83(5), pages 1220-1240, December.
    25. Calomiris, Charles W., 1990. "Is Deposit Insurance Necessary? A Historical Perspective," The Journal of Economic History, Cambridge University Press, vol. 50(02), pages 283-295, June.
    26. Banner, Stuart, 1998. "The Origin of the New York Stock Exchange, 1791-1860," The Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 113-140, January.
    27. Friedman, David D., 1994. "Law as a Private Good: A Response to Tyler Cowen on the Economics of Anarchy," Economics and Philosophy, Cambridge University Press, vol. 10(02), pages 319-327, October.
    28. Smith, Vernon L, 1980. "Experiments with a Decentralized Mechanism for Public Good Decisions," American Economic Review, American Economic Association, vol. 70(4), pages 584-599, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Powell, Benjamin & Wilson, Bart J., 2008. "An experimental investigation of Hobbesian jungles," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 669-686, June.
    2. 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.
    3. repec:eee:rujoec:v:3:y:2017:i:1:p:24-41 is not listed on IDEAS
    4. Edward Stringham, 2002. "The Emergence of the London Stock Exchange as a Self-Policing Club," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 17(Spring 20), pages 1-19.
    5. Peter T. Leeson, 2003. "Contracts Without Government," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 18(Spring 20), pages 35-54.
    6. Benjamin Powell & Edward Stringham, 2009. "Public choice and the economic analysis of anarchy: a survey," Public Choice, Springer, vol. 140(3), pages 503-538, September.
    7. Polterovich, Victor, 2017. "Positive collaboration: Factors and mechanisms of evolution," Russian Journal of Economics, Elsevier, vol. 3(1), pages 24-41.
    8. Edward Stringham & Caleb Miles, 2012. "Repelling states: Evidence from upland Southeast Asia," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 25(1), pages 17-33, March.
    9. Polterovich, Victor, 2016. "Позитивное Сотрудничество: Факторы И Механизмы Эволюции
      [Positive Collaboration: Factors and Mechanisms of Evolution]
      ," MPRA Paper 73448, University Library of Munich, Germany.
    10. Walter BLOCK, 2016. "Anti-aircraft Missiles and Gun Control," Journal of Social and Administrative Sciences, KSP Journals, vol. 3(2), pages 77-82, June.
    11. Rogers, Douglas B. & Smith, Adam C. & Wilson, Bart J., 2013. "Violence, access, and competition in the market for protection," European Journal of Political Economy, Elsevier, vol. 29(C), pages 1-17.
    12. Benjamin Powell, 2008. "Alain Marciano and Jean-Michel Josselin (eds.): Democracy, Freedom, and Coercion: A Law and Economics Approach," Public Choice, Springer, vol. 136(1), pages 249-251, July.

    More about this item

    Keywords

    networks; anarcho-Capitalism; collusion;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:26086. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.