Asymmetric Two-Stage Group Rent-Seeking: Comparison of Two Contest Structures
Two variations of a two-stage rent-seeking contest are considered. In the first stage of the Between-Group model, groups compete through the expenditure of resources by their members. Based on group expenditures, one winning group is probabilistically determined. On the second stage, members of the winning group compete with one another for an exogenous prize. In the Semi-Finals model a player is chosen from each group and then these players compete for the prize. Groups differ in size or in their valuation of the prize. Subgame-perfect equilibrium solutions are constructed for these two contest structures.
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