Simultaneous inter- and intra-group conflicts
[Simultane Konflikte innerhalb und zwischen Gruppen]
This paper models the trade-off between production and appropriation in the presence of simultaneous inter- and intra-group conflicts. The model exhibits a 'group cohesion effect': if the contest between the groups becomes more decisive, or contractual incompleteness between groups becomes more serious, the players devote fewer resources to the intra-group conflict. Moreover, there is also a 'reversed group cohesion effect': if the intra-group contests become less decisive, or contractual incompleteness within groups becomes less serious, the players devote more resources to the inter-group contest. The model also sheds new light on normative questions. I derive exact conditions for when dividing individuals in more groups leads to more productive and less appropriative activities. Furthermore, I show that there is an optimal size of the organization which is determined by a trade-off between increasing returns to scale in production and increasing costs of appropriative activities.
|Date of creation:||2005|
|Date of revision:|
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- Stergios Skaperdas, 2003.
"Restraining the Genuine Homo Economicus: Why the Economy Cannot Be Divorced from Its Governance,"
Economics and Politics,
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- Stergios Skaperdas, 2003. "Restraining the Genuine Homo Economicus: Why the Economy Cannot be Divorced from its Governance," CESifo Working Paper Series 901, CESifo Group Munich.
- Skaperdas, Stergios, 2003.
"Restraining the genuine homo economicus: why the economy cannot be divorced from its governance
[Die Beschränkung des genuinen Homo Economicus: Warum wirtschaftliche Prozesse und Governancestruktur," Discussion Papers, Research Unit: Market Processes and Governance SP II 2003-03, Social Science Research Center Berlin (WZB).
- Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
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- Gary Bornstein, 2002. "Intergroup conflict: Individual, group and collective interests," Discussion Paper Series dp297, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- Katz, Eliakim & Tokatlidu, Julia, 1996. "Group competition for rents," European Journal of Political Economy, Elsevier, vol. 12(4), pages 599-607, December.
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