Enforcement with Costly Group Formation

Chatterjee, Prabirendra; Sarangi, Sudipta

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Enforcement with Costly Group Formation

Economics Bulletin, Vol. 15, No. 9, pp. 1-8, 2005

8 Pages Posted: 20 Oct 2010

See all articles by Prabirendra Chatterjee

Prabirendra Chatterjee

Foster School of Business, University of Washington

Sudipta Sarangi

Virginia Polytechnic Institute & State University

Date Written: February 13, 2005

Abstract

The joint liability literature claims that positive assortative matching, or risk homogeneity, is always the first best solution. We examine this claim in presence of group formation costs and find that the assertion is not always true.

Suggested Citation: Suggested Citation

Chatterjee, Prabirendra and Sarangi, Sudipta, Enforcement with Costly Group Formation (February 13, 2005). Economics Bulletin, Vol. 15, No. 9, pp. 1-8, 2005, Available at SSRN: https://ssrn.com/abstract=1694328