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Can Competition Reduce Conflict?

Author

Listed:
  • Teevrat Garg
  • Caterina Gennaioli
  • Stefania Lovo
  • Gregor Singer

Abstract

We examine the effect of inter-group fiscal competition on within-group violent conflict. Using a triple difference design, we exploit exogenous variation in the degree to which villages in sub-districts compete for public funds. We find that higher competition between villages reduces conflict but only up to moderate levels of competition. The conflict-reducing effects of competition are largest in the most ethnically fractionalized and segregated villages and exist regardless of the eventual outcome of the competition. Our results are consistent with external competition favoring coordination within otherwise divided communities and boosting village identity relative to ethnic identity.

Suggested Citation

  • Teevrat Garg & Caterina Gennaioli & Stefania Lovo & Gregor Singer, 2023. "Can Competition Reduce Conflict?," CESifo Working Paper Series 10568, CESifo.
    • Handle: RePEc:ces:ceswps:_10568
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    References listed on IDEAS

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    More about this item

    Keywords

    community-driven development; competition; conflict;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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