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Rent-seeking contest when the prize increases with aggregate efforts

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Abstract

The objective of this article is to investigate contests in which efforts are productive. Tullock's standard rent-seeking model is extended by making the rent itself increase with the aggregate efforts. A positive externality is thereby introduced into the contest, because a contender's private effort in quest of the rent generates a benefit for other contenders. Coupled with a negative externality presented in the standard rent-seeking model, the net effect on the social efficiency of the contest is a priori ambiguous. It is shown that the extended contest generates socially wasteful, excessive aggregate efforts.

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Authors and Affiliations

  1. Department of Economics, University of Western Ontario, N6A 5C2, London, Ontario, Canada

    Tai-Yeong Chung

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  1. Tai-Yeong Chung
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Additional information

I would like to thank Kyung Hwan Baik, Arye Hillman, Gordon Tullock, Heinrich Ursprung, and an anonymous referee for many useful comments and suggestions on the previous version of this article. I also gratefully acknowledge financial support from the Social Sciences and Humanities Research Council of Canada (Grant #410-93-0072).

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Chung, TY. Rent-seeking contest when the prize increases with aggregate efforts. Public Choice 87, 55–66 (1996). https://doi.org/10.1007/BF00151729

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  • DOI: https://doi.org/10.1007/BF00151729

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