This paper analyzes the ability of group members to cooperate in rent-seeking activities in a context of between-group competition. For this purpose, we develop an infinitely repeated rent-seeking game between two groups of different size. We first investigate Nash reversion strategies to support cooperative behavior in a given group before analyzing double-edge trigger strategies which have the property that cheating on the cooperative agreement in a given group is followed by non-cooperation in this group and cooperation in the rival group. The main conclusion is that the set of parameters for which cooperation can be sustained within the larger group as a subgame perfect outcome is as large as that for which cooperation can be sustained in the smaller group. Hence, in contrast with Olson’s (1965) celebrated thesis but in accordance with many informal and formal observations, the larger group is as effective as the smaller group in furthering its interest.
collective action; rent-seeking; within-group cooperation;
- C72: Noncooperative Games
- C73: Stochastic and Dynamic Games • Evolutionary Games • Repeated Games
- D72: Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D74: Conflict • Conflict Resolution • Alliances
TSE Working Paper, n. 09-085, September 24, 2009