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Effort and Performance in Public-Policy Contests

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Author Info
Epstein, Gil S.
Nitzan, Shmuel

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Abstract

Government intervention often gives rise to contests in which the possible 'prizes' are determined by the existing status-quo and some new public- policy proposal . In this paper we study the general class of such two-player public-policy contests and examine the effect of a change in the proposed policy, a change that may affect the payoffs of the two contestants, on their effort and performance. We extend the existing comparative statics studies that focus on the effect of changes either in the value of the prize in symmetric contests or in one of the contestants' valuation of the prize in asymmetric contests. Our results hinge on the relationship between the strategic own-stake ("income") effect and the strategic rival's-stake ("substitution") effect. This relationship is determined by three types of ability and stakes asymmetry between the contestants. In particular, we specify the asymmetry condition under which a more restrained government intervention that reduces the contestants' prizes has the perverse effect of increasing their aggregate lobbying efforts.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 634.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_634

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Related research
Keywords: public-policy contests; policy reforms; lobbying efforts; strategic own-stake effect; strategic rival's-stake ("substitution") effect.;

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Find related papers by JEL classification:
D60 - Microeconomics - - Welfare Economics - - - General
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Gil S. Epstein & Shmuel Nitzan, 2002. "Endogenous Public Policy, Politicization and Welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(4), pages 661-677, October. [Downloadable!] (restricted)
  2. Hurley, Terrance M, 1998. " Rent Dissipation and Efficiency in a Contest with Asymmetric Valuations," Public Choice, Springer, vol. 94(3-4), pages 289-98, March. [Downloadable!] (restricted)
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  3. Fabella, Raul V., 1995. "The social cost of rent seeking under countervailing opposition to distortionary transfers," Journal of Public Economics, Elsevier, vol. 57(2), pages 235-247, June. [Downloadable!] (restricted)
  4. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
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  5. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics. [Downloadable!]
  6. Hurley, Terrance M. & Shogren, Jason F., 1998. "Effort levels in a Cournot Nash contest with asymmetric information," Journal of Public Economics, Elsevier, vol. 69(2), pages 195-210, June. [Downloadable!] (restricted)
  7. Epstein, Gil S & Nitzan, Shmuel, 2002. " Stakes and Welfare in Rent-Seeking Contests," Public Choice, Springer, vol. 112(1-2), pages 137-42, July. [Downloadable!] (restricted)
  8. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May. [Downloadable!] (restricted)
  9. Skaperdas, Stergios, 1992. "Cooperation, Conflict, and Power in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 82(4), pages 720-39, September. [Downloadable!] (restricted)
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  10. Ellingsen, Tore, 1991. "Strategic Buyers and the Social Cost of Monopoly," American Economic Review, American Economic Association, vol. 81(3), pages 648-57, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gil S. Epstein & Shmuel Nitzan, 2005. "Size and distribution of prizes and efforts in contests," Economics Bulletin, Economics Bulletin, vol. 8(10), pages 1-10. [Downloadable!]
  2. Gil Epstein & Shmuel Nitzan & Mordechai Schwarz, 2008. "Performance and prize decomposition in contests," Public Choice, Springer, vol. 134(3), pages 429-443, March. [Downloadable!] (restricted)
  3. Gil S. Epstein & Ira N Gang, 2006. "Decentralizing Aid with Interested Parties," Departmental Working Papers 200629, Rutgers University, Department of Economics. [Downloadable!]
    Other versions:
  4. Epstein, Gil S. & Gang, Ira N., 2008. "Good Governance and Good Aid Allocation," IZA Discussion Papers 3585, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Gil S. Epstein & Shmuel Nitzan, 2005. "Lobbying and Compromise," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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