Contests for Bads and Applications
13 Pages Posted: 23 Feb 2016
There are 2 versions of this paper
Date Written: February 23, 2016
Abstract
This paper proposes a Contest Success Function (CSF), which we call Inverse Tullock CSF, that is useful to study situations where individuals compete to avoid a bad. We study an application in which a government needs to allocate a dump in a region and wants to maximize lobbying. The government decides either to divide this dump in smaller pieces or not, considering that lobbies influence the government to avoid such bads in their region. We show that lobbying is maximized when the government does not divide the dump. We also axiomatize the Inverse Tullock CSF. We require five out of six axioms used by Skaperdas (1996), using Inverse Monotonicity instead of Monotonicity. We finally compare the properties of the Inverse Tullock CSF with the Tullock CSF. In a framework in which individuals compete to win many prizes and avoid many bads, we show that aggregate effort is higher using the (Inverse) Tullock CSF when there are more (less) prizes than bads.
Keywords: Contest, bads, Inverse Tullock Contest Success Function
JEL Classification: C72, D72, D74
Suggested Citation: Suggested Citation