Fostering Cooperation: The Conflict-Reducing Effects of Intervillage Competition for Government Transfers

Teevrat Garg, Caterina Gennaioli, Stefania Lovo and Gregor Singer

American Economic Journal: Applied Economics, 2026, vol. 18, issue 3, 283-321

Abstract: We examine the effect of intergroup competition on within-group violent conflict in Indonesia. Using a triple-differences design, we find that higher competition for national government transfers between villages reduces within-village conflict. These effects persist regardless of the competition's outcome, are stronger in ethnically fractionalized and segregated villages, and are accompanied by higher attendance in village meetings. Our results are consistent with external competition favoring participation and cooperation within otherwise divided communities, suggesting that economic incentives to compete with out-groups combined with forms of civic engagement can be important mechanisms to reduce violence within communities.

JEL-codes: D74 H70 O15 O17 O18 Z13 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/app.20240377

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