Econ Theory https://doi.org/10.1007/s00199-018-1130-z RESEARCH ARTICLE The paradox of power revisited: internal and external conﬂict 1 2 Ivan Lopez Cruz · Gustavo Torrens Received: 12 November 2016 / Accepted: 21 May 2018 © Springer-Verlag GmbH Germany, part of Springer Nature 2018 Abstract This paper develops a two-level model of internal and external conﬂict in which the paradox of power holds for internal conﬂict, but not for external conﬂict. In the model, internal conﬂict is imbedded in a situation of external conﬂict. Agents in a group ﬁght over the distribution of resources within the group, but they cooperate to ﬁght against other groups. Agents with low economic productivity have an advantage in the internal conﬂict game because they face a lower opportunity cost for investments in weapons. However, it is easier for more productive groups to mobilize resources for external conﬂict, and as a result they have an advantage over less productive groups. The model helps to explain why economically unproductive individuals may enjoy high living standards relative to more productive ones, but more developed groups usually defeat and conquer less developed ones. An extension of the model shows that groups with more unequal distribution of productivity might have an advantage
Economic Theory – Springer Journals
Published: May 29, 2018
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