An Experimental Analysis of Rent Seeking under Varying Competitive Conditions
We test several predictions of Gradstein's (1995) rent seeking model using an experimental design that includes a variable number of participants, cost heterogeneity, and an entry fee. Consistent with theoretical predictions, cost heterogeneity and the entry fee decrease the number of participants. Overall, participation is much lower than predicted. Also consistent with Gradstein's model, we find that rent seeking expenditures increase with the number of competitors and decrease with the addition of an entry fee. Experimental results do not support the prediction that cost heterogeneity generally decreases expenditures in rent seeking contests. Copyright 2003 by Kluwer Academic Publishers
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