Networks, Anarcho-Capitalism, and the Paradox of Cooperation

JEL Classifications: L13, K42, L15 Keywords: anarcho-capitalism, networks, collusion Abstract: There is a tension between libertarians' optimism about private supply of public goods and their skeptical of the viability of voluntary collusion. (Cowen 1992; Cowen and Sutter 1999) Playing off this asymmetry, Cowen (1992) advances the novel argument that the "free market in defense services" favored by anarcho-capitalists is a network industry where collusion is especially feasible. The current article dissolves Cowen's asymmetry, showing that he fails to distinguish between self-enforcing and non-self-enforcing interaction. Case study evidence on network behavior before and after antitrust supports our analysis. Furthermore, libertarians' joint beliefs on public goods and collusion are more theoretically defensible than Cowen and Sutter (1999) indicate.
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