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Olson vs. Coase: Coalitional worth in conflict
Esteban, Joan; Sákovics, József
Universitat Pompeu Fabra. Departament d'Economia i Empresa
We analyze a model of conflict with endogenous choice of effort, wheresubsets of the contenders may force the resolution to be sequential:First the alliance fights it out with the rest and in case they win later they fight it out among themselves. For three-player games, wefind that it will not be in the interest of any two of them to form analliance. We obtain this result under two different scenarios:equidistant preferences with varying relative strengths, and vicinityof preferences with equal distribution of power. We conclude that thecommonly made assumption of super-additive coalitional worth is suspect.
coalition formation
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