IDEAS home Printed from https://ideas.repec.org/a/eee/matsoc/v132y2024icp40-48.html
   My bibliography  Save this article

Rent dissipation in difference-form contests

Author

Listed:
  • Lahkar, Ratul

Abstract

We consider rent-seeking contests where the impact function, which measures how much impact effort has, takes an exponential form. The resulting contest success function (CSF) is a difference-form CSF and the contest is a difference-form contest. Rent dissipation measures the rent lost due to rent-seeking. Cost functions in our difference-form contest are also exponential. We establish the equivalence between such difference-form contests and Tullock contests. We then solve finite-player symmetric difference-form contests in closed form. But if there are asymmetries, the contest cannot be solved. We, therefore, approximate an asymmetric difference-form contest with a large population contest, which can be solved. Rent dissipation in the large population contest is the ratio of the elasticity of the impact function to that of the cost function. Hence, this ratio also approximates rent dissipation in a finite-player contest.

Suggested Citation

  • Lahkar, Ratul, 2024. "Rent dissipation in difference-form contests," Mathematical Social Sciences, Elsevier, vol. 132(C), pages 40-48.
  • Handle: RePEc:eee:matsoc:v:132:y:2024:i:c:p:40-48
    DOI: 10.1016/j.mathsocsci.2024.09.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165489624000842
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.mathsocsci.2024.09.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ratul Lahkar & Saptarshi Mukherjee, 2023. "Optimal large population Tullock contests," Oxford Open Economics, Oxford University Press, vol. 2, pages 289-294.
    2. Hirshleifer, Jack & Osborne, Evan, 2001. "Truth, Effort, and the Legal Battle," Public Choice, Springer, vol. 108(1-2), pages 169-195, July.
    3. Che, Yeon-Koo & Gale, Ian, 2000. "Difference-Form Contests and the Robustness of All-Pay Auctions," Games and Economic Behavior, Elsevier, vol. 30(1), pages 22-43, January.
    4. Hirshleifer, Jack, 1991. "The Technology of Conflict as an Economic Activity," American Economic Review, American Economic Association, vol. 81(2), pages 130-134, May.
    5. Christian Ewerhart, 2021. "A typology of military conflict based on the Hirshleifer contest," ECON - Working Papers 400, Department of Economics - University of Zurich.
    6. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    7. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 573-605, June.
    8. Stefan Szymanski, 2010. "The Economic Design of Sporting Contests," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 1, pages 1-78, Palgrave Macmillan.
    9. Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 251-262, Springer.
    10. Richard Cornes & Roger Hartley, 2005. "Asymmetric contests with general technologies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 923-946, November.
    11. Ewerhart, Christian & Sun, Guang-Zhen, 2024. "The n-player Hirshleifer contest," Games and Economic Behavior, Elsevier, vol. 143(C), pages 300-320.
    12. Ewerhart, Christian & Sun, Guang-Zhen, 2018. "Equilibrium in the symmetric two-player Hirshleifer contest: Uniqueness and characterization," Economics Letters, Elsevier, vol. 169(C), pages 51-54.
    13. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 2, chapter 22, pages 649-709, Elsevier.
    14. Ratul Lahkar & Rezina Sultana, 2023. "Rent dissipation in large population Tullock contests," Public Choice, Springer, vol. 197(1), pages 253-282, October.
    15. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jia, Hao & Skaperdas, Stergios & Vaidya, Samarth, 2013. "Contest functions: Theoretical foundations and issues in estimation," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 211-222.
    2. Ewerhart, Christian & Sun, Guang-Zhen, 2024. "The n-player Hirshleifer contest," Games and Economic Behavior, Elsevier, vol. 143(C), pages 300-320.
    3. Sakshi Gupta & Ram Singh, 2018. "On Existence and Properties of Pure-strategy Equilibria under Contests," Working Papers id:12840, eSocialSciences.
    4. Luis Corchón & Matthias Dahm, 2010. "Foundations for contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 81-98, April.
    5. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    6. Pelosse, Yohan, 2009. "Mediated Contests and Strategic Foundations for Contest Success Functions," MPRA Paper 18664, University Library of Munich, Germany.
    7. Christian Ewerhart, 2014. "Elastic contests and the robustness of the all-pay auctions," ECON - Working Papers 155, Department of Economics - University of Zurich.
    8. Pelosse, Yohan, 2011. "Inter and intra-group conflicts as a foundation for contest success functions," MPRA Paper 31468, University Library of Munich, Germany.
    9. Hao Jia & Stergios Skaperdas, 2011. "Technologies of Conflict," Working Papers 101111, University of California-Irvine, Department of Economics.
    10. Stergios Skaperdas & Samarth Vaidya, 2012. "Persuasion as a contest," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 465-486, October.
    11. Goel, Sumit & Goyal, Amit, 2023. "Optimal tie-breaking rules," Journal of Mathematical Economics, Elsevier, vol. 108(C).
    12. Luis Corchón, 2007. "The theory of contests: a survey," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 69-100, September.
    13. Kimbrough, Erik O. & Laughren, Kevin & Sheremeta, Roman, 2020. "War and conflict in economics: Theories, applications, and recent trends," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 998-1013.
    14. Hwang, Sung-Ha, 2012. "Technology of military conflict, military spending, and war," Journal of Public Economics, Elsevier, vol. 96(1), pages 226-236.
    15. Ewerhart, Christian, 2017. "Contests with small noise and the robustness of the all-pay auction," Games and Economic Behavior, Elsevier, vol. 105(C), pages 195-211.
    16. Ratul Lahkar & Rezina Sultana, 2023. "Rent dissipation in large population Tullock contests," Public Choice, Springer, vol. 197(1), pages 253-282, October.
    17. Morgan, John & Tumlinson, Justin & Várdy, Felix, 2022. "The limits of meritocracy," Journal of Economic Theory, Elsevier, vol. 201(C).
    18. Antoine Pietri, 2017. "Les modèles de « rivalité coercitive » dans l’analyse économique des conflits," Revue d'économie politique, Dalloz, vol. 127(3), pages 307-352.
    19. Beviá, Carmen & Corchón, Luis C., 2013. "Endogenous strength in conflicts," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 297-306.
    20. Reut Megidish & Aner Sela, 2013. "Allocation of Prizes in Contests with Participation Constraints," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(4), pages 713-727, December.

    More about this item

    Keywords

    Contest success function (CSF); Rent dissipation; Tullock contest; Difference-form contest;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:matsoc:v:132:y:2024:i:c:p:40-48. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505565 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.