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

24 Pages Posted: 4 Dec 2013

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

Abstract

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.

Keywords: rent dissipation, central planner, contest, all-pay auction, generalized logit contest success function

JEL Classification: D70, D71, D72

Suggested Citation

Epstein, Gil S. and Mealem, Yosef, Politicians, Governed vs. Non-Governed Interest Groups and Rent Dissipation. IZA Discussion Paper No. 7736. Available at SSRN: https://ssrn.com/abstract=2363223

Gil S. Epstein (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972 3 531 8937 (Phone)
+972 3 535 3180 (Fax)

HOME PAGE: http://faculty.biu.ac.il/~epsteig/

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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

Drayton House
30 Gordon Street
London, WC1H 0AX
United Kingdom

Yosef Mealem

Netanya Academic College

1 University St
Netanya 42100, 4223587
Israel

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