When Growth leads to Zero-Sum Conflict

Alvaro Delgado-Vega and Barton Lee

No 21010, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Individuals often face a tradeoff between cooperating to expand a collective good (the “pie†) or competing to expand their share of it. We study this tradeoff as a dynamic public goods problem where the pie's size and its shares can only be gradually changed and contributions to the pie are irreversible. In the unique subgame perfect equilibrium, growth of pie occurs but halts at an inefficiently low level, at which point perpetual conflict over the shares ensues. Growth ultimately leads to a prisoner's dilemma stage game, but cooperation is unsustainable for any discount factor. We also explore the dynamics of growth and conflict and empirical relevance of our results.

Keywords: zero-sum conflict; Growth; Dynamic games (search for similar items in EconPapers)
JEL-codes: D72 D74 D78 P00 (search for similar items in EconPapers)
Date: 2026-01
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