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Winner‐Help‐Loser Group Formation In Rent‐Seeking Contests

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  • Kyung Hwan Baik

Abstract

We define a winner‐help‐loser group in a rent‐seeking contest as follows: (a) the member players compete noncooperatively to win the rent, and (b) if a member player wins the rent, he helps the losing member players according to the previously written agreement. We demonstrate that one and only one winner‐help‐loser group is formed voluntarily. One important consequence of such group formation is that rent dissipation is small relative to individual rent seeking. Therefore, such group formation decreases the social cost associated with rent seeking and thus decreases the economic inefficiency of rent seeking.

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  • Kyung Hwan Baik, 1994. "Winner‐Help‐Loser Group Formation In Rent‐Seeking Contests," Economics and Politics, Wiley Blackwell, vol. 6(2), pages 147-162, July.
    • Handle: RePEc:bla:ecopol:v:6:y:1994:i:2:p:147-162
    DOI: 10.1111/j.1468-0343.1994.tb00093.x
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    References listed on IDEAS

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    1. Heinrich W. Ursprung, 2008. "Public Goods, Rent Dissipation, And Candidate Competition," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 329-346, Springer.
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    8. Richard A. Posner, 1975. "The Social Costs of Monopoly and Regulation," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 45-65, Springer.
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    13. Baik, Kyung Hwan, 1993. "Effort levels in contests : The public-good prize case," Economics Letters, Elsevier, vol. 41(4), pages 363-367.
    14. Torsten Schmidt, 1992. "Rent‐Seeking Firms And Consumers: An Equilibrium Analysis," Economics and Politics, Wiley Blackwell, vol. 4(2), pages 137-149, July.
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    Cited by:

    1. Dhritiman Gupta, 2020. "Prize Sharing Rules in Collective Contests: Towards Strategic Foundations," Discussion Papers 20-01, Indian Statistical Institute, Delhi.
    2. Gil S. Epstein & Shmuel Nitzan, 2003. "Political culture and monopoly price determination," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(1), pages 1-19, August.
    3. Baik, Kyung Hwan & Kim, In-Gyu, 1997. "Delegation in contests," European Journal of Political Economy, Elsevier, vol. 13(2), pages 281-298, May.
    4. Baik, Kyung Hwan & Dijkstra, Bouwe R. & Lee, Sanghack & Lee, Shi Young, 2006. "The equivalence of rent-seeking outcomes for competitive-share and strategic groups," European Journal of Political Economy, Elsevier, vol. 22(2), pages 337-342, June.
    5. Pau Balart & Sabine Flamand & Orestis Troumpounis, 2016. "Strategic choice of sharing rules in collective contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(2), pages 239-262, February.
    6. Kjell Hausken, 1995. "Intra-Level and Inter-Level Interaction," Rationality and Society, , vol. 7(4), pages 465-488, October.
    7. Dhritiman Gupta, 2020. "Prize sharing rules in collective contests: When does group size matter?," Discussion Papers 20-04, Indian Statistical Institute, Delhi.
    8. Diane J. Reyniers, 1996. "Cooperation In Contests," Rationality and Society, , vol. 8(4), pages 413-432, November.
    9. Dijkstra, Bouwe R., 1998. "Cooperation by way of support in a rent seeking contest for a public good," European Journal of Political Economy, Elsevier, vol. 14(4), pages 703-725, November.
    10. Hwan Baik, Kyung & Lee, Sanghack, 1997. "Collective rent seeking with endogenous group sizes," European Journal of Political Economy, Elsevier, vol. 13(1), pages 121-130, February.
    11. Shmuel Nitzan & Kaoru Ueda, 2014. "Cost Sharing in Collective Contests," CESifo Working Paper Series 4825, CESifo.
    12. Nitzan, Shmuel & Ueda, Kaoru, 2011. "Prize sharing in collective contests," European Economic Review, Elsevier, vol. 55(5), pages 678-687, June.
    13. Farhad Nili & Gabriel Talmain, "undated". "Rent-seeking, Occupational Choice and Oil Boom," Discussion Papers 01/11, Department of Economics, University of York.
    14. Matthias Kräkel, 2004. "R&D spillovers and strategic delegation in oligopolistic contests," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 147-156.
    15. Gil Epstein & Yosef Mealem, 2013. "Who gains from information asymmetry?," Theory and Decision, Springer, vol. 75(3), pages 305-337, September.
    16. Nitzan, Shmuel & Ueda, Kaoru, 2009. "Collective contests for commons and club goods," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 48-55, February.
    17. Baik, Kyung Hwan & Lee, Sanghack, 2001. "Strategic Groups and Rent Dissipation," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 672-684, October.
    18. Pau Balart & Sabine Flamand & Oliver Gürtler & Orestis Troumpounis, 2018. "Sequential choice of sharing rules in collective contests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(5), pages 703-724, October.
    19. Karl Jandoc & Ruben Juarez, 2017. "Self-enforcing coalitions with power accumulation," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(2), pages 327-355, May.
    20. Baik, Kyung Hwan, 1998. "Difference-form contest success functions and effort levels in contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 685-701, November.

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