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Title:Inefficient group organization as optimal adaption to dominant environments PDF Logo
Authors:Kolmar, Martin
Wagener, Andreas
Issue Date:2010
Series/Report no.:CESifo working paper Public Choice 3157
Abstract:Contests between groups are plagued by intra-group externalities (freeriding). Yet, costless incentive schemes that entirely avoid free-riding within a group might not be desirable, neither individually nor socially. In contests among two groups, a relatively weak (i.e., small or unproductive) group will optimally not implement them because they compound strength differences between groups. If both groups rein in their intra-group externalities, they are both worse off, compared to a situation with free-riding, if they are relatively similar. If they are sufficiently heterogenous, the weak group loses at the expense of the relatively strong group.
group-size paradox
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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