ASYMMETRY AND COLLUSION IN INFINITELY REPEATED CONTESTS

J. Atsu Amegashie

No 509, Working Papers from University of Guelph, Department of Economics and Finance

Abstract: I show that in an infinitely repeated contest, collusion is easier to sustain when the players are more equal than when they are less equal. Therefore, aggregate rent-seeking expenditures may be lower when the contestants are more equally matched. This is in sharp contrast to the standard result in static rent-seeking contests where increasing asymmetries between players reduce aggregate expenditures. I also discuss how this result has implications for signaling in contests with incomplete information.

Keywords: aggregate expenditures; asymmetry; collusion; folk theorem. (search for similar items in EconPapers)
JEL-codes: D44 D72 D74 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2005
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:gue:guelph:2005-9

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