Networks, Law, and the Paradox of Cooperation

18 Pages Posted: 16 Sep 2010

See all articles by Bryan Caplan

Bryan Caplan

George Mason University - Center for Study of Public Choice

Edward Peter Stringham

Trinity College; American Institute for Economic Research

Date Written: 2003

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.

Keywords: Networks, Anarcho-Capitalism, Collusion

JEL Classification: L13, K42, L15

Suggested Citation

Caplan, Bryan and Stringham, Edward Peter, Networks, Law, and the Paradox of Cooperation (2003). Review of Austrian Economics, Vol. 16, No. 4, p. 309, 2003. Available at SSRN: https://ssrn.com/abstract=1676248

Bryan Caplan

George Mason University - Center for Study of Public Choice ( email )

Fairfax, VA 22030
United States
703-993-2324 (Phone)
703-993-2323 (Fax)

Edward Peter Stringham (Contact Author)

Trinity College ( email )

Hartford, CT 06106
United States

American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States

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