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Is it Harmful to Allow Partial Cooperation?
Author(s) -
Beaudry Paul,
Cahuc Pierre,
Kempf Hubert
Publication year - 2000
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00181
Subject(s) - economics , politics , public good , microeconomics , welfare , partial equilibrium , wage , public economics , neoclassical economics , market economy , political science , general equilibrium theory , law
In economics, politics and society, examples abound in economics, politics and society where agents can enter partial cooperation schemes, i.e., they can collude with a subset of agents. Several contributions devoted to specific settings have claimed that such partial cooperation actually worsens welfare compared to the no‐cooperation situation. Our paper assesses this view by highlighting the forces that lead to such results. We find that the nature of strategic spillovers is central to determining whether partial cooperation is bad. Our propositions are then applied to various examples as industry wage bargaining or local public goods. JEL classification: C 72; E 62; J 5