I am Grateful to Herschel I. Grossman and two anonymous referees for helpful suggestion. This research was supported by the Hallym University Research Fund of 2000.
PRODUCTION, APPROPRIATION, AND INCOME TRANSFER
Version of Record online: 26 MAR 2007
Volume 40, Issue 2, pages 279–287, April 2002
How to Cite
Noh, S. J. (2002), PRODUCTION, APPROPRIATION, AND INCOME TRANSFER. Economic Inquiry, 40: 279–287. doi: 10.1093/ei/40.2.279
- Issue online: 26 MAR 2007
- Version of Record online: 26 MAR 2007
In a conflict between the prey and predator, the availability of income transfer option to the prey, given that defense is already an option, results in equilibrium where both defense and income transfer are utilized and the use of income transfer increases production efficiency by inducing either the prey or predator to divert resources from appropriation to production. The equilibrium amount of defense can be smaller because the prey has an interest in minimizing the amount of transfer that can be achieved in part by provoking a largest possible amount of offense from the predator if actual fight broke out.