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Rent-seeking incentives in share contests

Alex Dickson, Ian MacKenzie () and Petros Sekeris ()

Journal of Public Economics, 2018, vol. 166, issue C, 53-62

Abstract: This article investigates share contests. In our framework, we allow contestants to have more general preferences than have been used in the literature. Previous approaches have the unfortunate characteristic that contestants' marginal rates of substitution between the rent share allocated by the contest and their effort is constant regardless of the size of the rent share. This results in a conventional wisdom: larger rents command more effort. By providing a more general framework, we show the reverse may also be true and we derive the conditions under which this is the case. Our approach then allows us to rationalize, within a standard contest framework, observations that rents might be more hotly contested when they become scarcer, as has evidently been the case with the recent global contraction of public funds available for public policy.

Keywords: Contest; General preferences; Public policy (search for similar items in EconPapers)
JEL-codes: C72 D72 H40 (search for similar items in EconPapers)
Date: 2018
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