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Conjectural variations and the nature of equilibrium in rent-seeking models

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  • Robert Michaels

Abstract

In a symmetric two-person rent-seeking game, it is shown that nonzero conjectural variations can be incorporated to yield a larger class of solutions than has been hitherto analyzed. The author shows that the fraction of rents dissipated as expenditures by seekers depends on the conjectural variation which is assumed, and that Posner's assertion of full dissipation in his model only holds under a Bertrand conjecture. All admissible constant conjectural variations which are held by both players yield conjecturally consistent equilibria, but the result no longer holds if the game has a systematic bias toward one player. Copyright Kluwer Academic Publishers 1989

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  • Robert Michaels, 1989. "Conjectural variations and the nature of equilibrium in rent-seeking models," Public Choice, Springer, vol. 60(1), pages 31-39, January.
    • Handle: RePEc:kap:pubcho:v:60:y:1989:i:1:p:31-39
    DOI: 10.1007/BF00124310
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    References listed on IDEAS

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    1. Gordon Tullock, 1985. "Efficient rents 3 back to the bog," Public Choice, Springer, vol. 46(3), pages 259-263, January.
    2. Martin K. Perry, 1982. "Oligopoly and Consistent Conjectural Variations," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 197-205, Spring.
    3. Posner, Richard A, 1975. "The Social Costs of Monopoly and Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 807-827, August.
    4. Robert Michaels, 1988. "The design of rent-seeking competitions," Public Choice, Springer, vol. 56(1), pages 17-29, January.
    5. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-122, February.
    6. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-945, December.
    7. William Corcoran & Gordon Karels, 1985. "Efficient rents 1 rent-seeking behavior in the long-run," Public Choice, Springer, vol. 46(3), pages 227-246, January.
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    Cited by:

    1. Paulo Brito & Bipasa Datta & Huw Dixon, 2011. "The evolution of mixed conjectures in the rent-extraction game," Discussion Papers 11/06, Department of Economics, University of York.
    2. Possajennikov, Alex, 2009. "The evolutionary stability of constant consistent conjectures," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 21-29, October.
    3. Holloway, Garth J., 1995. "Conjectural Variations With Fewer Apologies," Working Papers 225880, University of California, Davis, Department of Agricultural and Resource Economics.

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