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Conflict and rent-seeking success functions: Ratio vs. difference models of relative success

In: 40 Years of Research on Rent Seeking 1

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  • Jack Hirshleifer

    (University of California)

Abstract

The rent-seeking competitions studied by economists fall within a much broader category of conflict interactions that also includes military combats, election campaigns, industrial disputes, lawsuits, and sibling rivalries. In the rent-seeking literature, each party’s success p1 (which can be interpreted either as the probability of victory or as the proportion of the prize won) has usually been taken to be a function of the ratio of the respective resource commitments. Alternatively, however, p1 may instead be a function of the difference between the parties’ commitments to the contest. The Contest Success Function (CSF) for the difference form is a logistic curve in which, as is consistent with military experience, increasing returns apply up to an inflection point at equal resource commitments. A crucial flaw of the traditional ratio model is that neither onesided submission nor two-sided peace between the parties can ever occur as a Cournot equilibrium. In contrast, both of these outcomes are entirely consistent with a model in which success is a function of the difference between the parties’ resource commitments.

Suggested Citation

  • Jack Hirshleifer, 1989. "Conflict and rent-seeking success functions: Ratio vs. difference models of relative success," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 251-262, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-79182-9_14
    DOI: 10.1007/978-3-540-79182-9_14
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    References listed on IDEAS

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    1. Richard Allard, 1988. "Rent-seeking with non-identical players," Public Choice, Springer, vol. 57(1), pages 3-14, April.
    2. Elie Appelbaum & Eliakim Katz, 1986. "Transfer seeking and avoidance: On the full social costs of rent seeking," Public Choice, Springer, vol. 48(2), pages 175-181, January.
    3. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-898, December.
    4. Hillman, Arye L & Katz, Eliakim, 1984. "Risk-Averse Rent Seekers and the Social Cost of Monopoly Power," Economic Journal, Royal Economic Society, vol. 94(373), pages 104-110, March.
    5. Howard Brackney, 1959. "The Dynamics of Military Combat," Operations Research, INFORMS, vol. 7(1), pages 30-44, February.
    6. William Corcoran & Gordon Karels, 1985. "Efficient rents 1 rent-seeking behavior in the long-run," Public Choice, Springer, vol. 46(3), pages 227-246, January.
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