Governing Interest Groups and Rent Dissipation

39 Pages Posted: 21 Jun 2011

See all articles by Gil S. Epstein

Gil S. Epstein

Bar-Ilan University - Department of Economics; IZA Institute of Labor Economics; University College London - CReAM - Centre for Research and Analysis of Migration

Yosef Mealem

Netanya Academic College

Date Written: November 1, 2010

Abstract

In a contest group-specific public goods we consider the effect that managing an interest group has on the rent dissipation and the total expected payoffs of the contest. While in the first group, there is a central planner determining its members’ expenditure in the contest, in the second group there are two different possibilities: either all the members are governed by a central planner or they aren’t. We consider both types of contests: an all pay auction and a Logit contest success function. We show that while governing an interest group decreases free-riding, it may as well decrease the rent dissipation; at the same time the expected payoffs from the groups may also decrease.

Suggested Citation

Epstein, Gil S. and Mealem, Yosef, Governing Interest Groups and Rent Dissipation (November 1, 2010). Bar-Ilan University Department of Economics Research Paper No. 2010-19. Available at SSRN: https://ssrn.com/abstract=1868895 or http://dx.doi.org/10.2139/ssrn.1868895

Gil S. Epstein (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
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HOME PAGE: http://faculty.biu.ac.il/~epsteig/

IZA Institute of Labor Economics ( email )

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University College London - CReAM - Centre for Research and Analysis of Migration ( email )

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Yosef Mealem

Netanya Academic College

1 University St
Netanya 42100, 4223587
Israel

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