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Stable Alliance Formation in Distributional Conflict

  • Michelle R. Garfinkel

    (University of California at Irvine)

This paper develops a positive analysis of alliance formation that builds on a simple economic model featuring a “winner-take-all” contest for control of some resource. When an alliance forms, members pool their efforts in that contest and,if successful, apply the resource to a joint production process. The analysis does not assume that the alliance has some special advantage in the conflict or that the joint production process exhibits increasing returns. Nor is there any presumption that peace prevails among the alliance members. In this setting, the analysis finds that, due to the familiar free-rider problem, the formation of alliances tends to reduce the severity of the conflict over the contestable resource. Furthermore, despite the internal conflict that arises among the winning alliance’s members over the distribution of their joint product, under reasonable conditions this effect alone is sufficient to support stable alliance formation in a noncooperative equilibrium.

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File URL: http://econwpa.repec.org/eps/pe/papers/0305/0305001.pdf
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Paper provided by EconWPA in its series Public Economics with number 0305001.

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Date of creation: 05 May 2003
Date of revision: 16 Jun 2003
Handle: RePEc:wpa:wuwppe:0305001
Note: Type of Document - pdf; prepared on IBM PC ; to print on HP;
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  18. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
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