Tullock's Rent-Seeking Contest with a Minimum Expenditure Requirement

Lambert Schoonbeek and Peter Kooreman

Public Choice, 1997, vol. 93, issue 3-4, 477-86

Abstract: The authors consider a rent-seeking contest of the kind introduced by Tullock (1980) in which two players compete for a monopoly rent. They extend the contest by requiring that if a player puts forward an effort, his expenditures must be larger than or equal to some minimum level. The authors show that, depending on the model parameters, the number of Nash equilibria of the extended model can be zero, one, two, or four. Furthermore, it turns out that the extent of rent dissipation in a Nash equilibrium of the extended model can be larger than, equal to, or smaller than the extent of rent dissipation in the unique Nash equilibrium of the original model. Copyright 1997 by Kluwer Academic Publishers

Date: 1997
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