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Simultaneous inter- and intra-group conflicts
[Simultane Konflikte innerhalb und zwischen Gruppen]

  • Münster, Johannes
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    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.

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    File URL: http://econstor.eu/bitstream/10419/51140/1/490066798.pdf
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    Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Processes and Governance with number SP II 2005-08.

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    Date of creation: 2005
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    Handle: RePEc:zbw:wzbmpg:spii200508
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    1. 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).
    2. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
    3. Nitzan, Shmuel, 1991. "Collective Rent Dissipation," Economic Journal, Royal Economic Society, vol. 101(409), pages 1522-34, November.
    4. 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.
    5. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
    6. 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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