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Politicians, Governed vs. Non-Governed Interest Groups and Rent Dissipation

  • Epstein, Gil S.


    (Bar-Ilan University)

  • Mealem, Yosef


    (Netanya Academic College)

Government intervention often gives rise to contests and the government can influence their outcome by choosing their type. We consider a contest with two interest groups: one that is governed by a central planner and one that is not. Rent dissipation is compared under two well-known contest success functions: the generalized logit and the all-pay auction. We also consider the case in which the government can limit the size of the non-governed interest group in order to determine the scope of rent dissipation, with the goal of either increasing the rent obtained by the government or reducing the wasted resources invested in the contest.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7736.

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Length: 24 pages
Date of creation: Nov 2013
Date of revision:
Publication status: published in: Theory and Decision, 2014 [Online]
Handle: RePEc:iza:izadps:dp7736
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  5. Gil S. Epstein & Yosef Mealem & Shmuel Nitzan, 2010. "Political Culture and Discrimination in Contests," Working Papers 2010-18, Bar-Ilan University, Department of Economics.
  6. Gil S. Epstein & Shmuel Nitzan, 2002. "Political Culture and Monopoly Price Determination," CESifo Working Paper Series 646, CESifo Group Munich.
  7. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1992. "Rigging the Lobbying Process: An Application of the All- Pay Auction," Papers 9-92-2, Pennsylvania State - Department of Economics.
  8. Baik, Kyung Hwan, 1999. "Rent-Seeking Firms, Consumer Groups, and the Social Costs of Monopoly," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 541-53, July.
  9. Luis Corchon & Matthias Dahm, 2007. "Foundations For Contest Success Functions," Economics Working Papers we070401, Universidad Carlos III, Departamento de Economía.
  10. Moldovanu, Benny & Sela, Aner, 2002. "Contest Architecture," Sonderforschungsbereich 504 Publications 02-06, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  11. Hurley, Terrance M. & Shogren, Jason F., 1998. "Effort levels in a Cournot Nash contest with asymmetric information," Journal of Public Economics, Elsevier, vol. 69(2), pages 195-210, June.
  12. Lien, Da-Hsiang Donald, 1990. "Corruption and allocation efficiency," Journal of Development Economics, Elsevier, vol. 33(1), pages 153-164, July.
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  14. Gil S. Epstein & Yosef Mealem, 2010. "Governing Interest Groups and Rent Dissipation," Working Papers 2010-19, Bar-Ilan University, Department of Economics.
  15. Gradstein, Mark, 1998. "Optimal contest design: volume and timing of rent seeking in contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 575-585, November.
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  17. Taylor, Curtis R, 1995. "Digging for Golden Carrots: An Analysis of Research Tournaments," American Economic Review, American Economic Association, vol. 85(4), pages 872-90, September.
  18. Gil S . Epstein & Shmuel Nitzan, 2002. "Endogenous Public Policy, Politicization and Welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(4), pages 661-677, October.
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  23. Glazer, Amihai & Hassin, Refael, 1988. "Optimal Contests," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 133-43, January.
  24. Mark Gradstein, 1995. "Intensity Of Competition, Entry And Entry Deterrence In Rent Seeking Contests," Economics and Politics, Wiley Blackwell, vol. 7(1), pages 79-91, 03.
  25. Amegashie, J Atsu, 2000. " Some Results on Rent-Seeking Contests with Shortlisting," Public Choice, Springer, vol. 105(3-4), pages 245-53, December.
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  27. Baye, Michael R. & Hoppe, Heidrun C., 2003. "The strategic equivalence of rent-seeking, innovation, and patent-race games," Games and Economic Behavior, Elsevier, vol. 44(2), pages 217-226, August.
  28. Terrance Hurley, 1998. "Rent dissipation and efficiency in a contest with asymmetric valuations," Public Choice, Springer, vol. 94(3), pages 289-298, March.
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  36. repec:zbw:rwirep:0315 is not listed on IDEAS
  37. Blavatskyy, Pavlo R., 2010. "Contest success function with the possibility of a draw: Axiomatization," Journal of Mathematical Economics, Elsevier, vol. 46(2), pages 267-276, March.
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