Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94161
Authors: 
Münster, Johannes
Year of Publication: 
2004
Series/Report no.: 
SFB/TR 15 Discussion Paper 4
Abstract: 
Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004: 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. Further, 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.
Subjects: 
Conflict
rent-seeking
federalism
hierarchy
JEL: 
D72
D74
H11
H74
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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