Conflict,Cooperation and Competition in Anarchy

Caplan and Stringham (2002) attempt to rebut the paradox of cooperation (Cowen and Sutter 1999) as it applies to libertarian anarchy. The paradox in the context of anarchy implies that if private defense agencies can cooperate to avoid conflict they can also collude to reestablish coercion. Caplan and Stringham argue that arbitration is self-enforcing while collusion requires solution of a prisoners dilemma. We agree that collusion requires more cooperative efficacy than arbitration, but maintain that arbitration requires considerably more organization than a simple coordination game. If a network of protection agencies can organize sufficiently to arbitrate disputes, they can also create a barrier to entry by refusing to arbitrate with entrants.