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Anarchy, Monopoly, and Predation

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  • Peter T. Leeson

Abstract

Although institutions rooted in the folk theorem can support self-enforcing exchange in a wide variety of contexts, their potential to create cooperation is not limitless. In particular, the folk theorem may break down when some agents are physically stronger than others. I demonstrate this in the context of Stringham's [2006] vertically integrated proprietary communities. In this system a monopoly proprietor maximizes profits by optimally extorting his tenants in violation of voluntary contracts. The result is a predatory rather than voluntary regime.

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  • Peter T. Leeson, 2007. "Anarchy, Monopoly, and Predation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(3), pages 467-482, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200709)163:3_467:amap_2.0.tx_2-w
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    12. Peter T. Leeson, 2009. "The Laws of Lawlessness," The Journal of Legal Studies, University of Chicago Press, vol. 38(2), pages 471-503, June.
    13. Peter Leeson, 2007. "Efficient anarchy," Public Choice, Springer, vol. 130(1), pages 41-53, January.
    14. Leeson, Peter T., 2005. "Self-enforcing arrangements in African political economy," Journal of Economic Behavior & Organization, Elsevier, vol. 57(2), pages 241-244, June.
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    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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