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Uncertain preassigned non-contestable and contestable rents

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  • Kahana, Nava
  • Nitzan, Shmuel

Abstract

Potential beneficiaries of government commitments often face the problem of guaranteeing that the commitments are carried out. For example, funds can be allocated via the budget, but not disbursed. The disbursement may be subject to the ambiguities of non-specified timing, or non-specified ‘appropriate ’ conditions. Potential beneficiaries then have incentives to undertake activities that affect the timing of disbursement of the prespecified funds. This paper studies the ensuing rent-seeking game against the uncertain behavior or discredibility of the government. We show that the resources expended by potential beneficiaries of government rents can be substantial, but they cannot exceed 30% of the preassigned rents. The extent of rent dissipation is incomplete and approaches unity for the critical value of government discredibility that still induces the individual to engage in rent-seeking. Contestability of the allocated funds - now referred to as contestable rents - increases the extent of rent-seeking outlays. Nevertheless, delayed uncertain contestable rents cannot be overdissipated.
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  • Kahana, Nava & Nitzan, Shmuel, 1999. "Uncertain preassigned non-contestable and contestable rents," European Economic Review, Elsevier, vol. 43(9), pages 1705-1721, October.
    • Handle: RePEc:eee:eecrev:v:43:y:1999:i:9:p:1705-1721
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    Cited by:

    1. Farhad Nili & Gabriel Talmain, "undated". "Rent-seeking, Occupational Choice and Oil Boom," Discussion Papers 01/11, Department of Economics, University of York.
    2. Gil Epstein & Shmuel Nitzan & Mordechai Schwarz, 2008. "Efforts in two-sided contests," Public Choice, Springer, vol. 136(3), pages 283-291, September.
    3. Jean-Daniel Guigou & Bruno Lovat & Marc Boissaux, 2013. "Asymmetric contests with risky rents," DEM Discussion Paper Series 13-9, Department of Economics at the University of Luxembourg.
    4. Gil Epstein & Igal Milchtaich & Shmuel Nitzan & Mordechai Schwarz, 2007. "Ambiguous political power and contest efforts," Public Choice, Springer, vol. 132(1), pages 113-123, July.
    5. Jean-Daniel Guigou & Bruno Lovat & Marc Boissaux, 2013. "Asymmetric contests with risky rents," LSF Research Working Paper Series 13-9, Luxembourg School of Finance, University of Luxembourg.
    6. Gil Epstein & Yosef Mealem, 2015. "Politicians, governed versus non-governed interest groups and rent dissipation," Theory and Decision, Springer, vol. 79(1), pages 133-149, July.
    7. Anil Yildizparlak, 2018. "An Application of Contest Success Functions for Draws on European Soccer," Journal of Sports Economics, , vol. 19(8), pages 1191-1212, December.
    8. Levin, Mark (Левин, Марк) & Shilova, Nadezhda V. (Шилова, Надежда), 2016. "Rentseeking Behavior in Systems with a Complex Structure [Рентоориентированное Поведение В Системах Со Сложной Структурой]," Working Papers 2272, Russian Presidential Academy of National Economy and Public Administration.

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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