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Competing for Loyalty: The Dynamics of Rallying Support

Author(s): Iaryczower, Matias; Oliveros, Santiago

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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.
Publication Date: Oct-2017
Citation: Iaryczower, M, Oliveros, S. (2017). Competing for Loyalty: The Dynamics of Rallying Support. American Economic Review, 107 (10), 2990 - 3005. doi:10.1257/aer.20150755
DOI: doi:10.1257/aer.20150755
ISSN: 0002-8282
Pages: 2990 - 3005
Type of Material: Journal Article
Journal/Proceeding Title: American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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