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A Cooperative Game Theory of Noncontiguous Allies

Daniel Arce and Todd Sandler ()

Journal of Public Economic Theory, 2001, vol. 3, issue 4, 391-411

Abstract: This paper develops a cooperative game-theoretic representation of alliances with noncontiguous members that is based on cost savings from reducing overlapping responsibilities and sequestering borders. For various scenarios, three solutions (the Shapley value, nucleolus, and core's centroid) are found and compared. Even though their underlying ethical norm varies, the solutions are often identical for cases involving contiguous allies and for rectangular arrays of noncontiguous allies. When transaction costs and/or alternative spatial configurations are investigated, they may then differ. In all cases the cooperative approach leads to a distribution of alliance costs that need not necessarily coincide with the traditional emphasis on gross domestic product size as a proxy for deterrence value (the exploitation hypothesis). Instead, burdens can now be defined based upon a country's spatial and strategic location within the alliance. Copyright 2001 by Blackwell Publishing Inc.

Date: 2001
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