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Inequality and a Repeated Joint Project

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  • Olivier Dagnelie

Abstract

Agents voluntarily contribute to an infinitely repeated joint project. We investigate the conditions for cooperation to be a renegotiation-proof and coalition-proof equilibrium before examining the influence of output share inequality on the sustainability of cooperation. When shares are not equally distributed, cooperation requires agents to be more patient than under perfect equality. Beyond a certain degree of share inequality, full efficiency cannot be reached without redistribution. This model also explains the coexistence of one cooperating and one free-riding coalition. In this case, increasing inequality can have a positive or negative impact on the aggregate level of effort.

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  • Olivier Dagnelie, 2008. "Inequality and a Repeated Joint Project," Working Papers 344, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:344
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    References listed on IDEAS

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    1. Olivier Dagnelie, 2008. "Inequality and a Repeated Joint Project," UFAE and IAE Working Papers 740.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).

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