Alternative intervention mechanisms in rent-seeking contests

Friedhelm Hentschel ()
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Friedhelm Hentschel: SIAW-HSG, University of St. Gallen

Economics of Governance, 2023, vol. 24, issue 4, No 3, 453-471

Abstract: Abstract This paper models a rent-seeking contest which allows for the provision of third-party support. Support can be either provided by reducing the supported player’s cost of fighting or by increasing the ability to fight. I present and solve a rent-seeking contest which nests these two intervention mechanisms. Among others, I find that for identical intervention costs of the two mechanisms, the intervention mechanism becomes irrelevant for the outcome of the contest if the supported player’s cost ability parameter as well as the ability to fight are identical. Additionaly, the model endogenizes the third party’s choice of the applicable intervention mechanism. Among others, I find that different intervention mechanisms can lead to identical outcomes, despite different levels of fighting efforts.

Keywords: Rent-seeking; Conflict; Lottery contest; Third-party intervention; Intervention mechanism (search for similar items in EconPapers)
JEL-codes: D72 D74 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10101-023-00298-1

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