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Production and Conflict Models Versus Rent-Seeking Models

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Author Info
Kjell Hausken ()

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Abstract

A production and conflict (P&C) model and a rent-seeking (RS) model are compared for one group, two groups and K groups. Adding a new agent enlarges the pie in the P&C model, but causes the fixed size pie to be allocated on one more rent seeker in the RS model. The total production or rent is distributed within and between groups according to the within-group and between-group decisiveness. Productive and fighting efficiencies and group sizes play a role. The collective action problem is more severe for the RS model. As group size increases, the ratio of within-group to between-group fighting increases marginally toward a constant for the P&C model, while it increases convexly for the RS model. Adding an additional agent to each of two groups is more detrimental to the utilities in RS groups than in P&C groups, while adding a second group of agents when there is already one group of agents gives the reverse result. The severe between-group fighting in the P&C model for many groups causes the P&C model to be preferable for few groups, while the RS model is preferable for many groups. Applications are considered to intergroup migration, inside versus outside ownership, divestitures, mergers and acquisitions, multidivisional versus single-tier firms and U form versus M form of economic organization. Copyright Springer Science + Business Media, Inc. 2005

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Publisher Info
Article provided by Springer in its journal Public Choice.

Volume (Year): 123 (2005)
Issue (Month): 1 (April)
Pages: 59-93
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Handle: RePEc:kap:pubcho:v:123:y:2005:i:1:p:59-93

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Web page: http://www.springerlink.com/link.asp?id=100332

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  1. Kjell Hausken & John F. Knutsen, 2004. "An Enabling Mechanism for the Creation, Adjustment, and Dissolution of States and Governmental Units," Public Economics 0409011, EconWPA. [Downloadable!]
  2. Kjell Hausken, 2006. "The Stability Of Anarchy And Breakdown Of Production," Defence and Peace Economics, Taylor and Francis Journals, vol. 17(6), pages 589-603, December. [Downloadable!] (restricted)
  3. Caruso, Raul, 2006. "Conflict and Conflict Management with Interdependent Instruments and Asymmetric Stakes,(The Good-Cop and the Bad-Cop Game)," MPRA Paper 214, University Library of Munich, Germany, revised Sep 2006. [Downloadable!]
    Other versions:
  4. Caruso, Raul, 2008. "Spesa Pubblica E Criminalità Organizzata In Italia Evidenza Empirica Su Dati Panel Nel Periodo 1997-2003," MPRA Paper 6861, University Library of Munich, Germany. [Downloadable!]
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