Simultaneous inter- and intra-group conflicts

Simultane Konflikte innerhalb und zwischen Gruppen

Johannes Münster

Discussion Papers, Research Unit: Market Processes and Governance from WZB Berlin Social Science Center

Abstract: This paper models the trade-off between production and appropriation in the presence of simultaneous inter- and intra-group conflicts. The model exhibits a 'group cohesion effect': if the contest between the groups becomes more decisive, or contractual incompleteness between groups becomes more serious, the players devote fewer resources to the intra-group conflict. Moreover, there is also a 'reversed group cohesion effect': if the intra-group contests become less decisive, or contractual incompleteness within groups becomes less serious, the players devote more resources to the inter-group contest. The model also sheds new light on normative questions. I derive exact conditions for when dividing individuals in more groups leads to more productive and less appropriative activities. Furthermore, I show that there is an optimal size of the organization which is determined by a trade-off between increasing returns to scale in production and increasing costs of appropriative activities.

Keywords: Conflict; rent-seeking; federalism; hierarchy (search for similar items in EconPapers)
JEL-codes: D72 D74 H11 H74 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmpg:spii200508

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