Cooperation and between-group competition

Introducing competition between groups may induce cooperation to emerge in defection games despite considerable cost of cooperation. If the groups can confine themselves to a cooperative sector, either by providing incentives to raise the cooperation level in one group, or by providing disincentives so that the cooperation level in the other group gets lowered to match that of the first, maximum degrees of cooperation can be obtained. The cooperative sector broadens as the degrees of cooperation increase, or the cost of cooperation decreases, or the group benefits of cooperation increase. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: C72; C73; D72; D74.