Efficiency in Contests Between Groups

We study collective contests in which contestants lobby as groups. Our main observation is that group lobbying effort is efficiently produced in equilibrium, apparently contradicting conventional interpretations of results in the literature. This observation also leads to a substantial simplification of the analysis of equilibria through the application of a decomposition theorem, which shows that, under standard conditions a collective contest can be analyzed by reducing it to a conventional Tullock contest between groups in which each group has a group-specific cost function derived from the individual members’ cost functions. The theorem also allows us to transfer results from standard contest theory to collective contests. For example, it can be used to establish conditions for the existence and uniqueness of equilibria in collective contests. Similarly, we can apply well-known results in comparative statics to study how group composition affects the lobbying effectiveness of groups and to investigate rent dissipation.