Is it Harmful to Allow Partial Cooperation?

Posted: 24 Jan 2001

See all articles by Pierre Cahuc

Pierre Cahuc

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA); University of Angers - French National Center for Scientific Research (CNRS); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Hubert Kempf

Ecole Normale Superieure de Cachan (ENS)

Paul Beaudry

University of British Columbia (UBC) - Vancouver School of Economics; National Bureau of Economic Research (NBER)

Abstract

In economics, politics and society, examples abound where agents can enter partial cooperation schemes, i.e., they can collude with a subset of agents. Several contributions devoted to specific settings have claimed that such partial cooperation actually worsens welfare compared to the no-cooperation situation. Our paper assesses this view by highlighting the forces that lead to such results. We find that the nature of strategic spillovers is central to determining whether partial cooperation is bad. Our propositions are then applied to various examples as industry wage bargaining or local public goods.

JEL Classification: C72, E65, J5

Suggested Citation

Cahuc, Pierre and Kempf, Hubert and Beaudry, Paul, Is it Harmful to Allow Partial Cooperation?. The Scandinavian Journal of Economics, Vol. 102, No. 1, 2000. Available at SSRN: https://ssrn.com/abstract=234977

Pierre Cahuc

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

92245 Malakoff Cedex
France

Université Paris I Panthéon-Sorbonne - Equipe Universitaire de Recherche en Economie Quantitative (EUREQUA) ( email )

106-112 Boulevard de l'Hopital
Paris Cedex 13, 75647
France
+33 1 4117 3717 (Phone)
+33 1 4117 3724 (Fax)

HOME PAGE: http://eurequa.univ-paris1.fr/membres/cahuc/

University of Angers - French National Center for Scientific Research (CNRS)

106-112 Boulevard de l'Hopital
75647 Paris Cedex 13
France
+33 4 44 07 82 06 (Phone)
+33 4 44 07 82 02 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Hubert Kempf

Ecole Normale Superieure de Cachan (ENS) ( email )

61 avenue du président Wilson
Cachan, Paris 94235
France

Paul Beaudry (Contact Author)

University of British Columbia (UBC) - Vancouver School of Economics ( email )

997-1873 East Mall
Vancouver, British Columbia V6T 1Z1
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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