Wealth Inequality and Collective Action (original) (raw)
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Inequality and Collective Action
In this paper we analyze the effect of inequality in the distribution of endowments of private inputs (like land, capital) on production efficiency through its effect on the voluntary provision of collective inputs (like irrigation, public research) that are complementary in production with those private inputs. The collective inputs can be both of the kind in which one producer benefits from their use by others (as in the case of research and extension) and the kind in which one's use detracts from potential use by others (as in the case of irrigation water from a pond). Markets in the private inputs are assumed to be imperfect, inhibiting their efficient allocation across individuals. In this context we work out how an increase in inequality in the distribution of private inputs affects the voluntary provision or use of the collective inputs and the total production surplus in this simple economy. In general we show that while production surplus increases with greater equality within the group of contributors (users) and the group of non-contributors (non-users) to the collective input, in some situations there is an optimal degree of inequality between the two groups.
Inequality, market imperfections, and the voluntary provision of collective goods
Manuscript. Berkeley: Univ. California
We analyze the effect of inequality in the distribution of endowment of private inputs (eg, land, wealth) that are complementary in production with collective inputs (eg, contribution to public goods such as irrigation and extraction from common-property resources) on efficiency in ...
Inequality, Market Imperfections, and Collective Action Problems
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In this paper we analyze the effects of wealth inequality on the provision of public goods and management of common-property resources (CPR) when there are market imperfections in inputs that are complementary in production to the collective good. We show that for public goods inequality impedes efficiency, while for use of CPRs there is an inverse U-shaped relationship between inequality and efficiency. We discuss the implications of these theoretical results for redistributive policies such as land reform.
Journal of Theoretical Politics, 2012
Past models treat economic inequality as an exogenous condition that can provide individuals a dominant incentive to produce collective goods unilaterally. Here, we part with that tradition so as (i) to treat economic inequality and collective action as endogenous, and (ii) to examine whether economic inequality can foster collective action even when all individuals can gain from free-riding. Using evolutionary game theory and computer simulations, we study whether cooperation can evolve when agents play multiple, one-shot PD games per generation and employ strategies that condition cooperative play on their game partners' wealth holdings. In this game environment, we find that collective action succeeds via a strategy in which players choose to cooperate when joining a PD with an economic equal and they defect when partnered with a player possessing wealth holdings unequal to their own. This strategy succeeds at producing cooperation because wealth disparities provide information about players' PD strategies, thus allowing prospective cooperators to avoid free-riders and to aim cooperation at players who will reciprocate it. Moreover, cooperating with economic equals remains robust even in the presence of errors that degrade the information conveyed by wealth disparities. These results signal an alternative avenue through which economic inequality can influence the viability of collective action.
Inequality, Coalitions and Collective Action
SSRN Electronic Journal, 2000
In a model where cooperation is beneficial, but subject to cheating, and is supported by trigger strategy punishments in a repeated game, we explore the relationship between the nature of cooperation (size and composition of coalitions) and underlying inequality in the distribution of private productive assets.
When asymmetry or non-verifiability of information, or non-excludability of users, makes contracts incomplete or unenforceable, and where for these and other reasons there are impediments to efficient bargaining, we show that private contracting will not generally assign the control of assets and the residual claimancy over income streams of projects to achieve socially efficient outcomes, suggesting that the policy relevance of the widely accepted "efficiency-equity tradeoff" should be seriously reconsidered. We illustrate these ideas with reference to misallocations in land, labor and credit markets. We also explore the consequences of redistributive policies for risk-taking and risk exposure when non-wealthy agents are risk-averse and for resolving collective action problems inherent in the provision of local public goods in the context of commons.
Wealth inequality, wealth constraints and economic performance
2000
When asymmetry or non-verifiability of information, or non-excludability of users, makes contracts incomplete or unenforceable, and where for these and other reasons there are impediments to efficient bargaining, we show that private contracting will not generally assign the control of assets and the residual claimancy over income streams of projects to achieve socially efficient outcomes, suggesting that the policy relevance of the widely accepted "efficiency-equity tradeoff" should be seriously reconsidered. We illustrate these ideas with reference to misallocations in land, labor and credit markets. We also explore the consequences of redistributive policies for risk-taking and risk exposure when non-wealthy agents are risk-averse and for resolving collective action problems inherent in the provision of local public goods in the context of commons.
Inequality, Coalitions and Collective Action - eScholarship
2004
In a model where cooperation is beneficial, but subject to cheating, and is supported by trigger strategy punishments in a repeated game, we explore the relationship between the nature of cooperation (size and composition of coalitions) and underlying inequality in the distribution of private productive assets.
Existence of an equilibrium of property rights
Mathematical Social Sciences, 1998
I study the existence of an equilibrium of private property rights in social systems where individual agents decide to make individual or collective gifts according to their individual preferences on the distribution of private consumption expenditures. It is proved that the distributive core is non-empty whenever there exists, at any feasible distribution of wealth, at least one agent in local unsympathetic isolation. The equality of property rights is in the distributive core if the agents have common opinions on the acceptable orientation of wealth transfers implying that redistributive transfers, when they exist, flow down the scale of wealth.
Distribution of Wealth and Interdependent Preferences
SSRN Electronic Journal
Distribution of Wealth and Interdependent Preferences * We examine the socially optimal wealth distribution in a two-person two-good model with heterogeneous workers and asymmetric social interactions where only one (social) individual derives positive or negative utility from the leisure of the other (non-social) individual. We show that the interdependence can effectively counteract the need to transfer wealth to lowwage individuals and may require them to be poorer by all objective measures. We demonstrate that in the presence of social interactions it can be socially desirable to keep substantial wealth inequality.