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Competing for Loyalty: The Dynamics of Rallying Support

Matias Iaryczower and Santiago Oliveros

American Economic Review, 2017, vol. 107, issue 10, 2990-3005

Abstract: We consider a class of dynamic collective action problems in which either a single principal or two competing principals vie for the support of members of a group. We focus on the dynamic problem that emerges when agents negotiate and commit their support to principals sequentially. We show that competition reduces agents' welfare with public goods, or if and only if there are positive externalities on uncommitted agents, and increases agents' welfare with public bads. We apply the model to the study of corporate takeovers, vote buying, and exclusive deals.

JEL-codes: D42 D62 D72 D82 G34 H41 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20150755
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