Asymmetry And Collusion In Infinitely Repeated Contests
AbstractI 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.
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Bibliographic InfoPaper provided by University of Guelph, Department of Economics and Finance in its series Working Papers with number 0509.
Length: 10 pages
Date of creation: 2005
Date of revision:
aggregate expenditures; asymmetry; collusion; folk theorem.;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
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