Fostering cooperation: the conflict-reducing effects of intervillage competition for government transfers

Teevrat Garg, Caterina Gennaioli, Stefania Lovo and Gregor Singer

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We examine the effect of inter-group 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.

Keywords: community-driven development; competition; conflict (search for similar items in EconPapers)
JEL-codes: D74 H70 O15 O17 O18 Z13 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2026-07-29
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Published in American Economic Journal: Applied Economics, 29, July, 2026, 18(3), pp. 283 – 321. ISSN: 1945-7782

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