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Olson vs. Coase: Coalitional worth in conflict

  • Joan Esteban
  • József Sákovics

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.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 645.

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Date of creation: Sep 2002
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Handle: RePEc:upf:upfgen:645
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. Skaperdas, Stergios, 1998. " On the Formation of Alliances in Conflict and Contests," Public Choice, Springer, vol. 96(1-2), pages 25-42, July.
  2. Garfinkel, Michelle R., 2004. "Stable alliance formation in distributional conflict," European Journal of Political Economy, Elsevier, vol. 20(4), pages 829-852, November.
  3. Baik, Kyung Hwan & Lee, Sanghack, 2001. "Strategic Groups and Rent Dissipation," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 672-84, October.
  4. 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.
  5. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
  6. Francis Bloch & Santiago Sánchez-Pagés & Raphaël Soubeyran, 2006. "When does universal peace prevail? Secession and group formation in conflict," Economics of Governance, Springer, vol. 7(1), pages 3-29, 01.
  7. Ray, D. & Vohra, R., 1993. "Equilibrium Binding Agreements," Papers 21, Boston University - Department of Economics.
  8. Ray, Debraj & Vohra, Rajiv, 1999. "A Theory of Endogenous Coalition Structures," Games and Economic Behavior, Elsevier, vol. 26(2), pages 286-336, January.
  9. 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.
  10. Yi, Sang-Seung & Shin, Hyukseung, 2000. "Endogenous formation of research coalitions with spillovers," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 229-256, February.
  11. Francis Bloch & Santiago S?chez-Pag? & Raphael Soubeyran, . "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).
  12. Greenberg, Joseph, 1994. "Coalition structures," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 37, pages 1305-1337 Elsevier.
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