Group Contests with Internal Conflict and Power Asymmetry

• Author: Subhasish M. Chowdhury,Jaesoo Kim,Jay Pil Choi
• Date: 01 October 2016
• Published date: 01 October 2016
• DOI: http://doi.org/10.1111/sjoe.12152

Scand. J. of Economics 118(4), 816–840, 2016

DOI: 10.1111/sjoe.12152

Group Contests with Internal Conflict

and Power Asymmetry∗

Jay Pil Choi†

Michigan State University, East Lansing, MI 48824, USA

choijay@msu.edu

Subhasish M. Chowdhury

University of East Anglia, Norwich NR4 7TJ, UK

s.modak-chowdhury@uea.ac.uk

Jaesoo Kim

Indiana University–Purdue University Indianapolis, Indianapolis, IN 46202, USA

jaeskim@iupui.edu

Abstract

We investigate simultaneous inter- and intra-group conflict in the shadow of within-group

power asymmetry and complementarity in members’ group-conflict efforts. A more symmet-

ric group faces a higher degree of internal conflict, and might expend more effort in external

conflict when the group-conflict effort technology is highly complementary. Depending on

the degree of complementarity, the stronger player’s relative contribution to external conflict

might be higher in a more asymmetric group and, as a result, it is possible for the weaker

player to earn a higher payoff. In the absence of any complementarity, the rent-dissipation

is non-monotonic with the within-group power asymmetry.

Keywords: Asymmetry; collective action; conflict; group contest

JEL classification:C72; D72; D74; H41

I. Introduction

Groups often engage in costly confrontations in order to win a reward,

while at the same time the group members contest with each other in order

to divide the possible reward among themselves. In such cases, each group

member often makes a decision about exerting costly effort for the group

†Also affiliated to Yonsei University.

∗We appreciate the useful comments from Kyung Hwan Baik, Martin Kolmar, Karl W¨

arneryd,

two anonymous referees, and participants of conferences and seminars at CESifo, Magdeburg,

Jadavpur, NCSU, WZB, Perth, UEA, and Sungkyunkwan. J. P. Choi acknowledges support

from the Research Foundation of Korea Grant funded by the Korean Government (NRF-

2014S1A5A2A01010660). The usual caveats apply.

CThe editors of The Scandinavian Journal of Economics 2015.

J. P. Choi, S. M. Chowdhury, and J. Kim 817

collective action, and also about exerting costly effort to compete with own

group members. In this paper, we study such situations in the shadow of

power asymmetry among group members.

There are numerous examples from political economy. In an open-list

electoral system, a candidate expends resources to convince voters to vote

for his party and, separately, to choose himself as the candidate within his

party (Ames, 1995). Interest groups compete for rents from government

policies while individuals – with possible unequal powers – within the

interest group contest for the spoils of the victory (M ¨

unster, 2007). When

countries in an alliance engage in conflict against another alliance, they

also need to decide how to share the burden of costs. This logic works

in the same way for the parties within a political alliance (Konrad and

Kovenock, 2009). It is also related to the long unanswered issue of the

“linkage between internal and external conflict” in political science, and

it is noted that “while a variety of theoretical perspectives would argue

for such linkages between internal and external conflict, difficult questions

continue to focus scholarly attention on this relationship” (Starr, 1994).

Similar examples can be drawn from industrial and organizational eco-

nomics. Firms producing a system good as complements compete against

another system and also divide profits among themselves. Competing re-

search joint ventures face the same issue. Employees in an organization

expend efforts collectively to overcome rival organizations, but at the same

time they compete with each other for promotions, bonuses, and inter-

nal rents (Glazer, 2002). Partners in an organization might compete with

each other, as well as with outsider owners to appropriate surplus (M¨

uller

and W¨

arneryd, 2001). Labor unions simultaneously confront the authority

as well as other unions. However, even within a union, workers sharing

the same political interest might come into conflict over ethnic issues

(Dasgupta, 2009).1

In all these examples, the nature of internal conflict simultaneously char-

acterizes the shape of external conflict, in particular, through collective

action between players within a group.2This article analyzes how the

1Various other important illustrations of such situations come from biology. Even in nature,

different species compete for limited resources within and between species-type simultane-

ously (Vandermeer, 1975). Sperm competition under polyandry reflects another example of

this structure (Haig and Bergstrom, 2002). There are cases in which sperm from a male bird

compete with each other in fertilizing the ovum of a polyandric female bird, but at the same

time the sperm extract enzymes or take other collective actions that damage (at least the

likelihood of the success of) sperm of other males (Baker, 1996; Buckland-Nicks, 1998).

2This area of literature dates back to Olson (1965), and was later developed by Becker

(1983), Palfrey and Rosenthal (1983), and Hardin (1995), among others. This can also

be interpreted as the collective action problem in two potentially important environments:

competition between groups and internal conflict within a group. See Ostrom (2000) and

Sandler and Hartley (2001) for literature reviews.

CThe editors of The Scandinavian Journal of Economics 2015.