EXTERNAL THREAT AND COLLECTIVE ACTION

This article studies how players allocate their endowed resources between productive and conflictual activities in the context of rivalry between two groups. We show that the suboptimality and exploitation propositions established by Olson (1965) do not necessarily apply when external threat is endo...

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Bibliographic Details
Published in:Economic inquiry 2005-07, Vol.43 (3), p.519-530
Main Authors: NIOU, EMERSON M. S., Tan, Guofu
Format: Article
Language:English
Subjects:
Analysis
Competition (Economics)
Conflict
Economic stabilization
Economic theory
Game theory
Games of strategy
Group dynamics
Mathematical methods
Resource allocation
Rivalry
Strategic planning
Studies
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Summary:This article studies how players allocate their endowed resources between productive and conflictual activities in the context of rivalry between two groups. We show that the suboptimality and exploitation propositions established by Olson (1965) do not necessarily apply when external threat is endogenized. We also illustrate that it does not always pay to take an offensive stance. When competing with an offensive group, it might be better for members of a defensive group to remain defensive. Furthermore, in the context of rivalry between two groups, free riding can actually benefit everyone in the system. (JEL D70, D74)
ISSN:0095-2583
1465-7295
DOI:10.1093/ei/cbi035