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Networks, Law, and the Paradox of Cooperation

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Abstract

There is a tension between libertarians' optimism about private supply of public goods and skepticism of the viability of voluntary collusion (Cowen 1992, Cowen and Sutter 1999). Playing off this asymmetry, Cowen (1992) advances the novel argument that the “free market in defense services” favored by anarcho-capitalists is a network industry where collusion is especially feasible. The current article dissolves Cowen's asymmetry, showing that he fails to distinguish between self-enforcing and non-self-enforcing interaction. Case study evidence on network behavior before and after antitrust supports our analysis. Furthermore, libertarians' joint beliefs on public goods and collusion are, contrary to Cowen and Sutter (1999), theoretically defensible.

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Authors and Affiliations

  1. Department of Economics, San Jose State University, San Jose, CA, 95192

    Bryan Caplan & Edward Stringham

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  1. Bryan Caplan
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  2. Edward Stringham
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Caplan, B., Stringham, E. Networks, Law, and the Paradox of Cooperation. The Review of Austrian Economics 16, 309–326 (2003). https://doi.org/10.1023/A:1027393021392

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