Abstract.
Individuals often face a tradeoff between cooperating to expand a
collective good (the “pie”) or competing to expand their share of it. We
study this tradeoff as a dynamic public goods problem where the pie’s
size and its shares can only be gradually changed and contributions to
the pie are irreversible. In the unique subgame perfect equilibrium,
growth of pie occurs but halts at an inefficiently low level, at which
point perpetual conflict over the shares ensues. Growth ultimately leads
to a prisoner’s dilemma stage game, but cooperation is unsustainable
for any discount factor. We also explore the dynamics of growth and
conflict and empirical relevance of our results.
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