DP6741 The Alliance Formation Puzzle and Capacity Constraints

Author(s):	Kai A. Konrad, Dan Kovenock
Publication Date:	March 2008
Keyword(s):	Alliance formation puzzle, budget constraints, military conflict
JEL(s):	D72, D74
Programme Areas:	Public Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=6741

The formation of an alliance in conflict situations is known to suffer from a collective action problem and from the potential of internal conflict. We show that budget constraints of an intermediate size can overcome this strong disadvantage and explain the formation of alliances.