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Risk-Averse Rent Seeking with Shared Rents


  • Long, Ngo Van
  • Vousden, Neil J


This paper presents a Nash equilibrium model of rent-seeking behavior in which risk-averse players expend resources to obtain a share of a rent, as for example in contests for import quota licences. Results are obtained relating the equilibrium level of lobbying effort by each player to the value of the rent. In particular, reduced individual lobbying effort is associated with higher rents contested if players are sufficiently risk averse. The question of whether the value of rents is a good measure of the resource cost of rent seeking is also considered. A simple approximation involving risk and risk-aversion parameters is derived for the proportion of rents dissipated in long-run equilibrium. Risk and risk aversion are seen to reduce the rent-dissipation ratio below unity. Copyright 1987 by Royal Economic Society.

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  • Long, Ngo Van & Vousden, Neil J, 1987. "Risk-Averse Rent Seeking with Shared Rents," Economic Journal, Royal Economic Society, vol. 97(388), pages 971-985, December.
  • Handle: RePEc:ecj:econjl:v:97:y:1987:i:388:p:971-85

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    References listed on IDEAS

    1. Blundell, Richard W & Walker, Ian, 1982. "Modelling the Joint Determination of Household Labour Supplies and Commodity Demands," Economic Journal, Royal Economic Society, vol. 92(366), pages 351-364, June.
    2. Doup, T.M. & van der Laan, G. & Talman, A.J.J., 1984. "The (2n+1-2)-ray algorithm : A new simplicial algorithm to compute economic equilibria," Research Memorandum FEW 151, Tilburg University, School of Economics and Management.
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