Group size and group success in conflicts

Abstract

This paper analyzes the occurrence of the group-size paradox in situations in which groups compete for rents, allowing for degrees of rivalry of the rent among group members. We provide two intuitive criteria for the group-impact function which for groups with within-group symmetric valuations of the rent determine whether there are advantages or disadvantages for larger groups: social-interactions effects and returns to scale. For groups with within-group asymmetric valuations, the complementarity of group members’ efforts and the composition of valuations are shown to play a role as further factors.