DO RENT‐SEEKING GROUPS ANNOUNCE THEIR SHARING RULES?

Kyung Baik and Dongryul Lee

Economic Inquiry, 2012, vol. 50, issue 2, 348-363

Abstract: We study collective rent seeking between two groups in which each group has the option of releasing or not its sharing‐rule information. First, we show that the case where both groups release their sharing‐rule information never occurs in equilibrium; when the players are unevenly matched, one group releases its sharing‐rule information and the other does not. Then, we select the Pareto‐superior equilibrium when the players are unevenly matched. We show that, in this selected equilibrium, the underdog releases its sharing‐rule information, and the favorite does not; thus, the underdog becomes the leader, and the favorite the follower (JEL D72).

Date: 2012
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