Auctions with rent seeking
Marco Haan and
Lambert Schoonbeek
No 00F23, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)
Abstract:
We present a model which combines elements of an auction and a rent-seeking contest. Players compete for a prize. Apart from exerting lobbying efforts, they also have to submit a bid which is payable only if they win the prize. First, we ana-lyze the model if the returns-to-scale parameters of both bids and efforts are unity. We present a necessary and sufficient condition for the existence of a unique Nash equilibrium. In the equilibrium each player submits the same bid, while the sum of all efforts equals that bid. Second, we analyze the case in which the returns-to-scale parameters may differ from unity, and derive the implications of that specification.
Date: 2000
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Working Paper: Auctions with rent seeking (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:gro:rugsom:00f23
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