Simultaneous inter- and intra-group conflicts |
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Authors: | Johannes Münster |
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Institution: | (1) Free University of Berlin and WZB, Reichpietschufer 50, 10785 Berlin, Germany |
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Abstract: | 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, 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, 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 into more groups leads to more productive
and less appropriative activities. Moreover, 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.
I want to thank Paul Heidhues, Kai Konrad, Thomas Kittsteiner, Klaas Staal, an anonymous referee, and in particular Dan Kovenock
for very helpful comments and suggestions. Any remaining errors are mine. Financial support from the Deutsche Forschungsgemeinschaft
through SFB/TR 15 is gratefully acknowledged. |
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Keywords: | Conflict Rent-seeking Federalism Hierarchy |
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