EconPapers    
Economics at your fingertips  
 

Transitional Dynamics in a Tullock Contest with a General Cost Function

Martin Grossmann, Markus Lang and Helmut Dietl

The B.E. Journal of Theoretical Economics, 2011, vol. 11, issue 1, 26

Abstract: This paper constructs and analyzes open-loop equilibria in an infinitely repeated Tullock contest in which two contestants contribute efforts to accumulate individual asset stocks over time. To investigate the transitional dynamics of the contest in the case of a general cost function, we linearize the model around the steady state. Our analysis shows that optimal asset stocks and their speed of convergence to the steady state crucially depend on the elasticity of marginal effort costs, the discount factor and the depreciation rate. In the case of a cost function with a constant elasticity of marginal costs, a lower discount factor, a higher depreciation rate and a lower elasticity imply a higher speed of convergence to the steady state. We further analyze the effects of second prizes in the contest. A higher prize spread increases individual and aggregate asset stocks, but does not alter the balance of the contest in the long run. During the transition, a higher prize spread increases asset stocks, produces a more balanced contest in each period and increases the speed of convergence to the steady state.

Keywords: dynamic contest; transitional dynamics; logit contest; multiple prizes; rent-seeking (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.2202/1935-1704.1795 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Transitional Dynamics in a Tullock Contest with a General Cost Function (2010) Downloads
Working Paper: Transitional Dynamics in a Tullock Contest with a General Cost Function (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejtec:v:11:y:2011:i:1:n:17

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejte/html

DOI: 10.2202/1935-1704.1795

Access Statistics for this article

The B.E. Journal of Theoretical Economics is currently edited by Burkhard C. Schipper

More articles in The B.E. Journal of Theoretical Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

 
Page updated 2025-03-23
Handle: RePEc:bpj:bejtec:v:11:y:2011:i:1:n:17