Alliances among asymmetric countries

Prabal Roy Chowdhury ()
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Prabal Roy Chowdhury: Indian Statistical Institute, New Delhi

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: We examine alliances between asymmetric countries. We find that the results depend on the nature of the equilibrium. If the equilibrium is an interior one then, with an increase in asymmetry, the level of the alliance-wide defense good decreases and the divergence between the first best and the equilibrium level of the defense good increases. In case the equilibrium involves a corner solution, these results are reversed though. It may be argued, however, that the interior equilibrium case is the more relevant one.

Keywords: Alliance; Asymmetry; Public good; Defence (search for similar items in EconPapers)
JEL-codes: D74 P16 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2006-06
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