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On the Welfare Effect of an Equivalent Tariff and Quota

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  • O Gurtler

Abstract

In the principal-agent literature, a collective tournament, i.e. a tournament between teams, has been proposed as a solution to the free-rider problem. Competition between the teams is said to foster within-team cooperation and, hence, to mitigate free-riding. In this paper, we analyse the impact of an agent's liability on the tournament outcome. In the more realistic case of limited liability, a collective tournament is found to perform very poorly. Free-riding is, in this case, even intensified when applying a collective tournament.

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  • O Gurtler, 2006. "On the Welfare Effect of an Equivalent Tariff and Quota," Economic Issues Journal Articles, Economic Issues, vol. 11(1), pages 1-8, March.
  • Handle: RePEc:eis:articl:106gurtler
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    1. Lee, Sanghack & Hyeong Kang, J., 1998. "Collective contests with externalities," European Journal of Political Economy, Elsevier, vol. 14(4), pages 727-738, November.
    2. Nalbantian, Haig R & Schotter, Andrew, 1997. "Productivity under Group Incentives: An Experimental Study," American Economic Review, American Economic Association, vol. 87(3), pages 314-341, June.
    3. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
    4. Nitzan, Shmuel, 1991. "Collective Rent Dissipation," Economic Journal, Royal Economic Society, vol. 101(409), pages 1522-1534, November.
    5. Gurtler, Oliver, 2005. "Collective contests with externalities: corrigendum," European Journal of Political Economy, Elsevier, vol. 21(2), pages 533-536, June.
    6. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
    7. Muller, Holger M & Warneryd, Karl, 2001. "Inside versus Outside Ownership: A Political Theory of the Firm," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 527-541, Autumn.
    8. Davis, Douglas D & Reilly, Robert J, 1999. "Rent-Seeking with Non-identical Sharing Rules: An Equilibrium Rescued," Public Choice, Springer, vol. 100(1-2), pages 31-38, July.
    9. Dragon, Robert & Garvey, Gerald T. & Turnbull, Geoffrey K., 1996. "A collective tournament," Economics Letters, Elsevier, vol. 50(2), pages 223-227, February.
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