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Tullock's rent-seeking contest with a minimum expenditure requirement

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  • L. Schoonbeek
  • P. Kooreman

Abstract

We consider a rent-seeking contest of the kind introduced by Tullock (1980) in which two players compete for a monopoly rent. We extend the contest by requiring that if a player puts forward an effort, his expenditures must be larger than or equal to some minimum level. We show that, depending on the model parameters, the number of Nash equilibria of the extended model can be zero, one, two or four. Furthermore, it turns out that the extent of rent dissipation in a Nash equilibrium of the extended model can be larger than, equal to, or smaller than the extent of rent dissipation in the unique Nash equilibrium of the original model. Copyright Kluwer Academic Publishers 1997

Suggested Citation

  • L. Schoonbeek & P. Kooreman, 1997. "Tullock's rent-seeking contest with a minimum expenditure requirement," Public Choice, Springer, vol. 93(3), pages 477-486, December.
    • Handle: RePEc:kap:pubcho:v:93:y:1997:i:3:p:477-486
    DOI: 10.1023/A:1004907515703
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    Cited by:

    1. David Kelsey & Tigran Melkonyan, 2018. "Contests with ambiguity," Oxford Economic Papers, Oxford University Press, vol. 70(4), pages 1148-1169.
    2. ISKAKOV, Mikhail & ISKAKOV, Alexey & ZAKHAROV, Alexey, 2014. "Equilibria in secure strategies in the Tullock contest," LIDAM Discussion Papers CORE 2014010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Johannes Münster, 2007. "Rents, dissipation and lost treasures: Comment," Public Choice, Springer, vol. 130(3), pages 329-335, March.
    4. Giuseppe Dari-Mattiacci & Eric Langlais & Bruno Lovat & Francesco Parisi, 2007. "Crowding-out in productive and redistributive rent-seeking," Public Choice, Springer, vol. 133(1), pages 199-229, October.
    5. HHironori Otsubo, 2012. "Contests with Incumbency Advantages: An Experiment Investigation of the Effect of Limits on Spending Behavior and Outcome," Jena Economics Research Papers 2012-020, Friedrich-Schiller-University Jena.
    6. Hironori Otsubo, 2013. "Do campaign spending limits diminish competition? An experiment," Economics Bulletin, AccessEcon, vol. 33(3), pages 2223-2234.
    7. Münster, Johannes, 2006. "Rents, dissipation and lost treasures: comment," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 119, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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