Munich Personal RePEc Archive

A Tentative Model of Conflict, Appropriation and Production in a two-sector Economy

Caruso, Raul (2007): A Tentative Model of Conflict, Appropriation and Production in a two-sector Economy.

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Abstract

This paper presents a model of conflict in an economy characterized by two sectors. In a first sector labelled as contested sector two agents struggle in order to appropriate the maximum possible fraction of a contestable output. In a second sector, the uncontested sector, each agent holds secure property rights over the production of some goods. Both agents maximize an income function which can be described as a function of contributions of both sectors. Results show that the degree of returns in the uncontested sector is a powerful force which countervails the impact of destructive and unproductive interaction in the contested sector.

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