American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Competing for Loyalty: The Dynamics of Rallying Support
American Economic Review
vol. 107,
no. 10, October 2017
(pp. 2990–3005)
Abstract
We consider a class of dynamic collective action problems in which either a single principal or two competing principals vie for the support of members of a group. We focus on the dynamic problem that emerges when agents negotiate and commit their support to principals sequentially. We show that competition reduces agents' welfare with public goods, or if and only if there are positive externalities on uncommitted agents, and increases agents' welfare with public bads. We apply the model to the study of corporate takeovers, vote buying, and exclusive deals.Citation
Iaryczower, Matias, and Santiago Oliveros. 2017. "Competing for Loyalty: The Dynamics of Rallying Support." American Economic Review, 107 (10): 2990–3005. DOI: 10.1257/aer.20150755Additional Materials
JEL Classification
- D42 Market Structure, Pricing, and Design: Monopoly
- D62 Externalities
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D82 Asymmetric and Private Information; Mechanism Design
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- H41 Public Goods