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Perfectly Secure Property Rights and Production Inefficiencies in Tullock Contests

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  • Martin Kolmar

    () (Institute for Public Finance and Fiscal Law, University of St. Gallen, Varnbuelstrasse 19, CH-9000 St. Gallen, Switzerland)

Abstract

From the point of view of institutional economics, property rights are an instrument to shape individual incentives efficiently. For the case of a Tullock contest with endogenously determined rent, I analyze the circumstances under which perfectly secure property rights emerge in an economy where the security of property is endogenously determined. I analyze different sequential structures for the determination of defensive and appropriative investments and determine the equilibrium sequence of moves if the sequential structure is endogenous. It turns out that in subgames where perfectly secure property rights emerge, incentives for production are still inefficient. In addition, it can be shown that the endogenous determination of moves leads to a sequence of events that result in open conflict even if perfectly secure property rights would have been an alternative.

Suggested Citation

  • Martin Kolmar, 2008. "Perfectly Secure Property Rights and Production Inefficiencies in Tullock Contests," Southern Economic Journal, Southern Economic Association, vol. 75(2), pages 441-456, October.
  • Handle: RePEc:sej:ancoec:v:75:2:y:2008:p:441-456
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Roland Hodler & Hadi Yektas, 2013. "Wars of Conquest and Independence," CESifo Working Paper Series 4282, CESifo Group Munich.
    2. John R. Boyce & David M. Bruner, 2009. "Good Fences Make Good Neighbors: Endogenous Property Rights in a Game of Conflict," Working Papers 09-05, Department of Economics, Appalachian State University.
    3. Philipp Denter & Dana Sisak, 2010. ""Who's the thief?": Asymmetric Information and the Creation of Property Rights," University of St. Gallen Department of Economics working paper series 2010 2010-27, Department of Economics, University of St. Gallen.
    4. Hoffmann, Magnus & Rota-Graziosi, Grégoire, 2012. "Endogenous timing in general rent-seeking and conflict models," Games and Economic Behavior, Elsevier, vol. 75(1), pages 168-184.
    5. John Boyce & David Bruner, 2012. "Property rights out of anarchy? The Demsetz hypothesis in a game of conflict," Economics of Governance, Springer, vol. 13(2), pages 95-120, June.
    6. MacKenzie, Ian A. & Ohndorf, Markus, 2013. "Restricted Coasean bargaining," Journal of Public Economics, Elsevier, pages 296-307.
    7. Subhasish M. Chowdhury & Joo Young Jeon & Abhijit Ramalingam, 2016. "Property rights and loss aversion in contests," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 16-14, School of Economics, University of East Anglia, Norwich, UK..
    8. Christoffel Grechenig & Martin Kolmar, 2011. "The State’s Enforcement Monopoly and the Private Protection of Property," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_24, Max Planck Institute for Research on Collective Goods.

    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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