5 - Outbidding as Deterrence: Endogenous Demands in the Shadow of Group Competition

Summary

Target governments can reduce grievances among disaffected populations who might otherwise pledge support to a group. Incorporating this into the workhorse model, we show an unexpected relationship between the total number of groups and total violence observed. When few groups exist, the target state has little incentive to reduce grievances. Due to the lack of competition, the government calculates that paying that price in violence is worth offering fewer concessions. In contrast, when many groups exist, the competition instills great fear in the target state. As a result, it may calculate that entirely abandoning the objectionable policy is the best solution. Without any supporters to recruit, the groups then drop their violence outputs. Thus, violence may decrease in the number of competing groups because violence deters the government. We characterize the circumstances under which the deterrent effect dominates the competition effect and provide broader tips for the empirical literature on outbidding.