Economics of Governance

, Volume 20, Issue 1, pp 41–71 | Cite as

Corruption and paradoxes in alliances

  • Ricardo NievaEmail author
Original Paper


In order to study corruption when a person can adjudicate over property rights, we extend the Tullock contest model by letting identical workers and a non-productive enforcer, who is more effective at fighting, contest over a resource. Property rights for output are well defined, but it is not so for the resource. If the enforcer assigns the resource in the way he was mandated, then the grand coalition forms with no corruption. There is corruption if he colludes with a subset of the workers and gets a transfer; this coalition then fights over the resource against other groups of workers. For general cost effort functions, if the enforcer is effective enough and marginal productivity of labor is adequately low, addition of the enforcer to a coalition increases the sum of payoffs of its members and generates negative externalities on other coalitions; that is, to divide and rule becomes an attractive prospect. This matches the empirical association between corruption and labor productivity or income inequality.


Alliances Corruption Tullock contest Divide and rule 

JEL Classification

D72 D73 D74 



We thank Editor Amihai Glazer and the two referees involved for their very helpful comments. Thanks to Rosa Quispe for checking my results in the linear cost case.


  1. Acemoglu D (2003) Why not a political Coase theorem? Social conflict, commitment, and politics. J Comp Econ 31:620–652CrossRefGoogle Scholar
  2. Acemoglu D, Robinson J (2004) Kleptocracy and divide-and-rule: a model of personal rule. J Eur Econ Assoc 2(2–3):162–192CrossRefGoogle Scholar
  3. Acemoglu D, Robinson J (2006) Economic origins of dictatorship and democracy. Cambridge University Press, New YorkGoogle Scholar
  4. Acemoglu D, Robinson J (2008) The role of institutions in growth and development. WP No. 10 Commission on Growth and DevelopmentGoogle Scholar
  5. Acemoglu D, Robinson J (2017) The emergence of weak, despotic, and inclusive states. NBER Working Paper No 23657Google Scholar
  6. Acemoglu D, Egorov G, Sonin K (2008) Coalition formation in non democracies. Rev Econ Stud 75(4):987–1010CrossRefGoogle Scholar
  7. Acemoglu D, Egorov G, Sonin K (2012) Dynamics and stability of constitutions, coalitions and clubs. AER 102(4):1446–96CrossRefGoogle Scholar
  8. Acemoglu D, Egorov G, Sonin K (2015) Political economy in a changing world. J Polit Econ 123(5):1038–1086CrossRefGoogle Scholar
  9. Baik KH (1993) Effort levels in contests: the public-good prize case. Econ Lett 41(4):363–67CrossRefGoogle Scholar
  10. Bloch F, Sánchez-Pagés S, Soubeyran R (2006) When does universal peace prevail? Secession and group formation in conflict. Econ Gov 7(1):3–29CrossRefGoogle Scholar
  11. Cubel M, Sánchez-Pagés S (2012) The role of within-group inequality in a conflict against a unitary threat. Peace Econ Peace Sci Public Policy 18(3):1–11CrossRefGoogle Scholar
  12. Desierto D (2018) Formal models of the political resource curse. Forthcoming in Economics of GovernanceGoogle Scholar
  13. Dixit A (2003) Some lessons from transaction-cost politics for less-developed countries. Econ Polit 15(2):103–224CrossRefGoogle Scholar
  14. Estache A, Wren-Lewis L (2009) Toward a theory of regulation for developing countries: following Jean–Jacques Laffont’s lead. J Econ Lit 47(3):729–770CrossRefGoogle Scholar
  15. Esteban J, Ray D (2001) Collective action and the group size paradox. Am Polit Sci Rev 95:663–672CrossRefGoogle Scholar
  16. Esteban J, Ray D (2008) On the salience of ethnic conflict. Am Econ Rev 98:2185–2202CrossRefGoogle Scholar
  17. Esteban J, Ray D (2011) A model of ethnic conflict. J Eur Econ Assoc 9:496–521CrossRefGoogle Scholar
  18. Esteban J, Sakovicz J (2003) Olson vs. coase: coalitional worth in conflict. Theory Decis 55:339–357CrossRefGoogle Scholar
  19. Gupta S, Davoodi HR, Alonso-Terme R (2002) Does corruption affect income inequality and poverty? Econ Gov 3:23–45CrossRefGoogle Scholar
  20. Herbst L, Konrad K, Morath F (2015) Endogenous group formation in experimental contests. Eur Econ Rev 74:163–189CrossRefGoogle Scholar
  21. Hirshleifer J (1995) Anarchy and its beakdown. J Polit Econ 103:26–52CrossRefGoogle Scholar
  22. Homer-Dixon TF (1994) Environmental scarcities and violent conflict: evidence from cases. Int Secur 19:5–40CrossRefGoogle Scholar
  23. Hurwicz L (2007) But who will guard the guardians? Nobel Prize LectureGoogle Scholar
  24. Ke C, Konrad KA, Morath F (2013) Brothers in arms: an experiment on the alliance puzzle. Games Econ Behav 77(1):61–76CrossRefGoogle Scholar
  25. Kolmar M, Rommeswinkel H (2011) Technological determinant of the group-size paradox. Unpublished manuscript, University of St. GallenGoogle Scholar
  26. Konrad KA (2009) Strategy and dynamics in contests. Oxford University Press, New YorkGoogle Scholar
  27. Midlarsky M (1988) Rulers and the ruled: patterned inequality and the onset of mass political violence. Am Polit Sci Rev 82(2):491–509CrossRefGoogle Scholar
  28. Münster J (2009) Group contest success functions. Econ Theory 41(2):345–357CrossRefGoogle Scholar
  29. Myerson R (1991) Game theory: analysis of conflict. Harvard University Press, HarvardGoogle Scholar
  30. Nieva R (2003) An extension of the Aumann–Myerson solution for reasonable empty core games. In: Paper presented at the Econometric Society Summer Meetings 2003, Northwestern University, USAGoogle Scholar
  31. Olson M, Zeckhauser R (1966) An economic theory of alliances. Rev Econ Stat 47:266–279CrossRefGoogle Scholar
  32. Ray D (2007) A game-theoretic perspective on coalition formation. Oxford University Press, OxfordCrossRefGoogle Scholar
  33. Rose-Ackerman S, Palifka B (2016) Corruption and government: causes, consequences, and reform, 2nd edn. Cambridge University Press, New YorkCrossRefGoogle Scholar
  34. Salinas-Jimenez M, Salinas-Jimenez J (2008) Corruption, efficiency and productivity in OECD countries. J Policy Modelling 29(6):903–915CrossRefGoogle Scholar
  35. Sanchez-Pages S (2007a) Rivalry, exclusion, and coalitions. J Public Econ Theory 9(5):809–830CrossRefGoogle Scholar
  36. Sanchez-Pages S (2007b) Endogenous coalition formation in contests. Rev Econ Des 11:139–163Google Scholar
  37. Skaperdas S (1998) On the formation of alliances in conflicts and contests. Public Choice 96:25–42CrossRefGoogle Scholar
  38. Stein WE (2002) Asymmetric rent-seeking with more than two contestants. Public Choice 113:325–336CrossRefGoogle Scholar
  39. Tan G, Wang R (2010) Coalition formation in the presence of continuing conflict. Int J Game Theory 39:273–299CrossRefGoogle Scholar
  40. Turits R (2003) Foundations of despotism: peasants, the Trujillo regime, and modernity in Dominican history. Stanford University Press, Palo AltoGoogle Scholar
  41. Van Evera S (1998) Offense, defense, and the causes of war. Int Secur 4:5–43CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of EconomicsUniversidad de LimaLimaPeru

Personalised recommendations