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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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