Rent-seeking contest when the prize increases with aggregate efforts
✍ Scribed by Tai-Yeong Chung
- Publisher
- Springer US
- Year
- 1996
- Tongue
- English
- Weight
- 605 KB
- Volume
- 87
- Category
- Article
- ISSN
- 0048-5829
No coin nor oath required. For personal study only.
✦ Synopsis
The objective of this article is to investigate contests in which efforts are productive. Tullock's standard rent-seeking model is extended by making the rent itself increase with the aggregate efforts. A positive externality is thereby introduced into the contest, because a contender's private effort in quest of the rent generates a benefit for other contenders. Coupled with a negative externality presented in the standard rent-seeking model, the net effect on the social efficiency of the contest is apriori ambiguous. It is shown that the extended contest generates socially wasteful, excessive aggregate efforts. * I would like to thank Kyung Hwan Balk, Arye Hillman, Gordon Tullock, Heinrich Ursprung, and an anonymous referee for many useful comments and suggestions on the previous version of this article. I also gratefully acknowledge financial support from the Social Sciences and Humanities Research Council of Canada (Grant #410-93-0072).