Effort and Performance in Public-Policy Contents

25 Pages Posted: 30 Jan 2002

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

Shmuel Nitzan

Bar-Ilan University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 2002

Abstract

Government intervention often gives rise to contests in which the possible "prizes" are determined by the existing status-quo and some new public-policy proposal . In this paper we study the general class of such two-player public-policy contests and examine the effect of a change in the proposed policy, a change that may affect the payoffs of the two contestants, on their effort and performance. We extend the existing comparative statics studies that focus on the effect of changes either in the value of the prize in symmetric contests or in one of the contestants' valuation of the prize in asymmetric contests. Our results hinge on the relationship between the strategic own-stake "income" effect and the strategic rival's-stake "substitution" effect. This relationship is determined by three types of ability and stakes asymmetry between the contestants. In particular, we specify the asymmetry condition under which a more restrained government intervention that reduces the contestants' prizes has the perverse effect of increasing their aggregate lobbying efforts.

Keywords: Public-policy Contests, Policy Reforms, Lobbying Efforts, Strategic Own-stake Effect, Strategic Rival's-stake "Substitution" Effect

JEL Classification: D72, D6

Suggested Citation

Epstein, Gil S. and Nitzan, Shmuel, Effort and Performance in Public-Policy Contents (January 2002). Available at SSRN: https://ssrn.com/abstract=297607 or http://dx.doi.org/10.2139/ssrn.297607

Gil S. Epstein

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
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London, WC1H 0AX
United Kingdom

Shmuel Nitzan (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972.3.531.8930 (Phone)
+972.3.535.3180 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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