IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v166y2018icp53-62.html
   My bibliography  Save this article

Rent-seeking incentives in share contests

Author

Listed:
  • Dickson, Alex
  • MacKenzie, Ian A.
  • Sekeris, Petros G.

Abstract

This article investigates share contests. In our framework, we allow contestants to have more general preferences than have been used in the literature. Previous approaches have the unfortunate characteristic that contestants' marginal rates of substitution between the rent share allocated by the contest and their effort is constant regardless of the size of the rent share. This results in a conventional wisdom: larger rents command more effort. By providing a more general framework, we show the reverse may also be true and we derive the conditions under which this is the case. Our approach then allows us to rationalize, within a standard contest framework, observations that rents might be more hotly contested when they become scarcer, as has evidently been the case with the recent global contraction of public funds available for public policy.

Suggested Citation

  • Dickson, Alex & MacKenzie, Ian A. & Sekeris, Petros G., 2018. "Rent-seeking incentives in share contests," Journal of Public Economics, Elsevier, vol. 166(C), pages 53-62.
    • Handle: RePEc:eee:pubeco:v:166:y:2018:i:c:p:53-62
    DOI: 10.1016/j.jpubeco.2018.08.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272718301488
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2018.08.004?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. Joan Esteban & Massimo Morelli & Dominic Rohner, 2015. "Strategic Mass Killings," Journal of Political Economy, University of Chicago Press, vol. 123(5), pages 1087-1132.
    2. Riaz, Khalid & Shogren, Jason F & Johnson, Stanley R, 1995. "A General Model of Rent Seeking for Public Goods," Public Choice, Springer, vol. 82(3-4), pages 243-259, March.
    3. 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.
    4. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    5. Richard Cornes & Roger Hartley, 2012. "Risk aversion in symmetric and asymmetric contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 247-275, October.
    6. Nicolas Treich, 2010. "Risk-aversion and prudence in rent-seeking games," Public Choice, Springer, vol. 145(3), pages 339-349, December.
    7. Markus Brückner, 2010. "Population Size and Civil Conflict Risk: Is there a Causal Link?," Economic Journal, Royal Economic Society, vol. 120(544), pages 535-550, May.
    8. Cheikbossian, Guillaume, 2008. "Heterogeneous groups and rent-seeking for public goods," European Journal of Political Economy, Elsevier, vol. 24(1), pages 133-150, March.
    9. Cattaneo, M. Alejandra & Wolter, Stefan C., 2009. "Are the elderly a threat to educational expenditures?," European Journal of Political Economy, Elsevier, vol. 25(2), pages 225-236, June.
    10. Hillman, Arye L & Katz, Eliakim, 1984. "Risk-Averse Rent Seekers and the Social Cost of Monopoly Power," Economic Journal, Royal Economic Society, vol. 94(373), pages 104-110, March.
    11. Matias Iaryczower & Andrea Mattozzi, 2012. "The pro-competitive effect of campaign limits in non-majoritarian elections," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(3), pages 591-619, April.
    12. Skaperdas, Stergios, 1992. "Cooperation, Conflict, and Power in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 82(4), pages 720-739, September.
    13. Simeon Djankov & Jose Montalvo & Marta Reynal-Querol, 2008. "The curse of aid," Journal of Economic Growth, Springer, vol. 13(3), pages 169-194, September.
    14. Denter, Philipp & Sisak, Dana, 2015. "Do polls create momentum in political competition?," Journal of Public Economics, Elsevier, vol. 130(C), pages 1-14.
    15. Schroyen, Fred & Treich, Nicolas, 2016. "The power of money: Wealth effects in contests," Games and Economic Behavior, Elsevier, vol. 100(C), pages 46-68.
    16. Paan Jindapon & Christopher Whaley, 2015. "Risk lovers and the rent over-investment puzzle," Public Choice, Springer, vol. 164(1), pages 87-101, July.
    17. Neil Vousden & Ngo Van Long, 2008. "Risk-averse rent seeking with shared rents," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 293-307, Springer.
    18. Stephen Knack, 2001. "Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 310-329, October.
    19. Jakob Svensson, 2000. "Foreign aid and rent-seeking," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 165-189, Springer.
    20. Skaperdas, Stergios & Grofman, Bernard, 1995. "Modeling Negative Campaigning," American Political Science Review, Cambridge University Press, vol. 89(1), pages 49-61, March.
    21. Mwesigye, Francis & Matsumoto, Tomoya, 2016. "The Effect of Population Pressure and Internal Migration on Land Conflicts: Implications for Agricultural Productivity in Uganda," World Development, Elsevier, vol. 79(C), pages 25-39.
    22. Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2011. "Do interest groups affect US immigration policy?," Journal of International Economics, Elsevier, vol. 85(1), pages 114-128, September.
    23. Stergios Skaperdas & Constantinos Syropoulos, 2002. "Insecure Property and the Efficiency of Exchange," Economic Journal, Royal Economic Society, vol. 112(476), pages 133-146, January.
    24. Roland Hodler, 2007. "Rent seeking and aid effectiveness," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(5), pages 525-541, October.
    25. Keith Hartley & Todd Sandler (ed.), 2007. "Handbook of Defense Economics," Handbook of Defense Economics, Elsevier, edition 1, volume 2, number 1.
    26. Marijke Verpoorten, 2012. "Leave none to claim the land," Journal of Peace Research, Peace Research Institute Oslo, vol. 49(4), pages 547-563, July.
    27. Roger D. Congleton & Arye L. Hillman (ed.), 2015. "Companion to the Political Economy of Rent Seeking," Books, Edward Elgar Publishing, number 15325.
    28. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1275-1288, December.
    29. Gil Epstein & Shmuel Nitzan, 2006. "Reduced prizes and increased effort in contests," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 26(3), pages 447-453, June.
    30. Gil S. Epstein & Shmuel Nitzan, 2007. "Endogenous Public Policy and Contests," Springer Books, Springer, number 978-3-540-74818-2, June.
    31. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    32. Jindapon, Paan & Yang, Zhe, 2017. "Risk attitudes and heterogeneity in simultaneous and sequential contests," Journal of Economic Behavior & Organization, Elsevier, vol. 138(C), pages 69-84.
    33. Skaperdas, Stergios & Gan, Li, 1995. "Risk Aversion in Contests," Economic Journal, Royal Economic Society, vol. 105(431), pages 951-962, July.
    34. Binder, Seth & Neumayer, Eric, 2005. "Environmental pressure group strength and air pollution: An empirical analysis," Ecological Economics, Elsevier, vol. 55(4), pages 527-538, December.
    35. Acemoglu, Daron & Jensen, Martin Kaae, 2013. "Aggregate comparative statics," Games and Economic Behavior, Elsevier, vol. 81(C), pages 27-49.
    36. Cornes, Richard & Hartley, Roger, 2003. "Risk Aversion, Heterogeneity and Contests," Public Choice, Springer, vol. 117(1-2), pages 1-25, October.
    37. Katz, Eliakim & Tokatlidu, Julia, 1996. "Group competition for rents," European Journal of Political Economy, Elsevier, vol. 12(4), pages 599-607, December.
    38. George Economides & Sarantis Kalyvitis & Apostolis Philippopoulos, 2008. "Does foreign aid distort incentives and hurt growth? Theory and evidence from 75 aid-recipient countries," Public Choice, Springer, vol. 134(3), pages 463-488, March.
    39. Konrad, Kai A & Schlesinger, Harris, 1997. "Risk Aversion in Rent-Seeking and Rent-Augmenting Games," Economic Journal, Royal Economic Society, vol. 107(445), pages 1671-1683, November.
    40. Andre, Catherine & Platteau, Jean-Philippe, 1998. "Land relations under unbearable stress: Rwanda caught in the Malthusian trap," Journal of Economic Behavior & Organization, Elsevier, vol. 34(1), pages 1-47, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kjell Hausken, 2023. "Two-period Colonel Blotto contest with cumulative investments over variable assets with resource constraints," SN Business & Economics, Springer, vol. 3(11), pages 1-18, November.
    2. Alex Dickson & Ian A. MacKenzie, 2022. "Permit Markets with Political and Market Distortions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(1), pages 227-255, May.
    3. Serhii Bardash & Tetiana Osadcha, 2021. "Ontology of Variability of Accounting for Financial Rent," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 5-10, June.
    4. Du, Weijian & Fan, Yuhuan & Liang, Sunfan & Li, Mengjie, 2023. "The power of belief: Religious traditions and rent-seeking of polluting enterprises in China," Finance Research Letters, Elsevier, vol. 54(C).
    5. Kjell Hausken, 2021. "Axiomatizing additive multi-effort contests," SN Business & Economics, Springer, vol. 1(11), pages 1-12, November.
    6. Alex Dickson & Ian A. MacKenzie & Petros G. Sekeris, 2022. "Rent Dissipation in Simple Tullock Contests," Games, MDPI, vol. 13(6), pages 1-11, December.
    7. Liqun Liu & Nicolas Treich, 2021. "Optimality of winner-take-all contests: the role of attitudes toward risk," Journal of Risk and Uncertainty, Springer, vol. 63(1), pages 1-25, August.
    8. Du, Weijian & Li, Mengjie & Wang, Faming, 2020. "Role of rent-seeking or technological progress in maintaining the monopoly power of energy enterprises: An empirical analysis based on micro-data from China," Energy, Elsevier, vol. 202(C).
    9. Abbas Khandan, 2022. "Externalities in the rent-seeking strategies of lobbying and bribery," Public Sector Economics, Institute of Public Finance, vol. 46(3), pages 421-450.
    10. Alex Dickson & Ian MacKenzie & Petros G Sekeris, 2020. "Rent dissipation in share contests," Working Papers 2014, University of Strathclyde Business School, Department of Economics.
    11. Alex Dickson & Ian A MacKenzie & Petros G Sekeris, 2018. "The role of markets and preferences on resource conflicts," Working Papers 1819, University of Strathclyde Business School, Department of Economics.

    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. Alex Dickson & Ian A. MacKenzie & Petros G. Sekeris, 2016. "Sharing contests with general preferences," Discussion Papers Series 573, School of Economics, University of Queensland, Australia.
    2. Jean-Daniel Guigou & Bruno Lovat & Nicolas Treich, 2017. "Risky rents," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(2), pages 151-164, October.
    3. Brookins, Philip & Jindapon, Paan, 2021. "Risk preference heterogeneity in group contests," Journal of Mathematical Economics, Elsevier, vol. 95(C).
    4. Liqun Liu & Nicolas Treich, 2021. "Optimality of winner-take-all contests: the role of attitudes toward risk," Journal of Risk and Uncertainty, Springer, vol. 63(1), pages 1-25, August.
    5. March, Christoph & Sahm, Marco, 2018. "Contests as selection mechanisms: The impact of risk aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 114-131.
    6. Fu, Qiang & Wang, Xiruo & Wu, Zenan, 2021. "Multi-prize contests with risk-averse players," Games and Economic Behavior, Elsevier, vol. 129(C), pages 513-535.
    7. Alex Dickson & Ian A MacKenzie & Petros Sekeris, 2016. "Contests with general preferences," Working Papers 1608, University of Strathclyde Business School, Department of Economics.
    8. Van Long, Ngo, 2013. "The theory of contests: A unified model and review of the literature," European Journal of Political Economy, Elsevier, vol. 32(C), pages 161-181.
    9. Paul Pecorino, 2016. "Individual welfare and the group size paradox," Public Choice, Springer, vol. 168(1), pages 137-152, July.
    10. repec:elg:eechap:15325_3 is not listed on IDEAS
    11. 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.
    12. Richard Cornes & Roger Hartley, 2012. "Risk aversion in symmetric and asymmetric contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 247-275, October.
    13. Alex Dickson & Ian A. MacKenzie & Petros G. Sekeris, 2022. "Rent Dissipation in Simple Tullock Contests," Games, MDPI, vol. 13(6), pages 1-11, December.
    14. Fu, Qiang & Lyu, Youji & Wu, Zenan & Zhang, Yuanjie, 2022. "Expectations-based loss aversion in contests," Games and Economic Behavior, Elsevier, vol. 133(C), pages 1-27.
    15. Marco Sahm, 2017. "Risk Aversion and Prudence in Contests," CESifo Working Paper Series 6417, CESifo.
    16. Fu, Qiang & Wu, Zenan & Zhu, Yuxuan, 2022. "On equilibrium existence in generalized multi-prize nested lottery contests," Journal of Economic Theory, Elsevier, vol. 200(C).
    17. Liqun Liu & Jack Meyer & Andrew J. Rettenmaier & Thomas R. Saving, 2018. "Risk and risk aversion effects in contests with contingent payments," Journal of Risk and Uncertainty, Springer, vol. 56(3), pages 289-305, June.
    18. Mordechai E. Schwarz, 2023. "A master of two servants: lessons from the israeli experience about the effect of separation of powers on public accountability and social welfare," Constitutional Political Economy, Springer, vol. 34(1), pages 59-87, March.
    19. Nicolas Treich, 2010. "Risk-aversion and prudence in rent-seeking games," Public Choice, Springer, vol. 145(3), pages 339-349, December.
    20. Jean-Daniel Guigou & Bruno Lovat & Marc Boissaux, 2013. "Asymmetric contests with risky rents," LSF Research Working Paper Series 13-9, Luxembourg School of Finance, University of Luxembourg.
    21. Johannes Münster, 2009. "Group contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(2), pages 345-357, November.

    More about this item

    Keywords

    Contest; General preferences; Public policy;
    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
    • H40 - Public Economics - - Publicly Provided Goods - - - General

    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:pubeco:v:166:y:2018:i:c:p:53-62. 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/505578 .

    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.