the solution to the tullock rent seeking game when r 2 mixed strategy equilibria and mean dissipation rates in tullock s rent seeking model the probability a player wins the game depends on expenditures raised to the power r we show that a symmetric mixed strategy nash equilibrium exists when r 2 and that overdissipation of rents does not arise in any nash equilibrium we derive a tight lower bound on the level of rent dissipation that arises in a symmetric equilibrium when the strategy space is discrete and show that full rent dissipation occurs when the strategy space is continuous our results are shown to be consistent with recent experimental evidence on the dissipation of rents

semi targeted all pay auctions a partial exclusion principle abstract this paper studies the effects of a specific affirmative action policy in complete information all pay auctions when players differ in ability the contest organizer splits the overall prize of the competition into a targeted and an untargeted prize the targeted prize is exclusively for disadvantaged low ability agents and excludes advantaged agents partially from the overall prize we consider a setting with one high ability and two low ability contestants and fully characterize equilibrium assuming that the contest organizer aims to maximize expected total effort we show that i almost any targeted prize is preferable to a standard all pay auction without targeted prize ii the exclusion principle baye et al 1993 can be implemented by a wide range of sufficiently large targeted prizes and iii partial exclusion by means of an appropriately chosen targeted prize benefits the organizer more than complete exclusion we also discuss the robustness of our results in settings with more than three agents

incomplete information and rent dissipation in deterministic contests abstract in a deterministic contest or all pay auction all rents are dissipated when information is complete and contestants are identical as one contestant becomes stronger that is values the prize more total expenditures are known to decrease monotonically thus asymmetry among contestants reduces competition and rent dissipation recently this result has been shown to hold for other non deterministic contest success functions as well thereby suggesting a certain robustness in this paper however the complete information assumption is shown to be crucial i examine a tractable incomplete information model for which the complete information model is a special case with incomplete information regardless of how little total expenditures in a deterministic two player contest increase when one contestant becomes marginally stronger starting from a symmetric contest in fact both contestants expend resources more aggressively with complete information neither of them do so thus there is a discontinuity in the information structure

rent seeking and rent dissipation a neutrality result abstract we consider rent seeking contests between at least two agents who might value the prize differently we capture a wide range of institutional aspects of contests by analyzing a class of contest success functions fulfilling several properties the main properties are anonymity and a condition on the elasticity of a rent seeker s win probability with respect to her effort we show the existence of a mixed strategy equilibrium and establish equilibrium payoffs in this equilibrium complete rent dissipation holds our results imply a partial robustness result for the all pay auction

monopoly vs competition in light of extraction norms this note demonstrates that whether the market is competitive or monopolistic need not be the result of ideology political power or non convexity of the technology the answer can be determined by a government that maximizes the extracted resources from the alternative market structures our claim is illustrated by assuming that demand and supply are linear functions and that the government can extract the same share of the producers profit under the alternative market structures this share can be extracted from the actual producers or from the potential producers who take part in the contest to get a license to produce

caps on political lobbying the cost of political campaigns in the u s has risen substantially in recent years for example real spending on congressional election campaigns doubled between 1976 and 1992 steven d levitt 1995 there are many reasons why increased campaign spending might be socially harmful first increased spending means increased fund raising which may keep politicians from their legislative duties 1 second a lobbyist who makes a large campaign contribution may have undue influence on electoral outcomes on the shaping of legislation or on the outcome of regulatory proceedings 2 that is the socially preferred candidate or legislation may not prevail likewise a lobbyist involved in a regulatory matter or a competition for a government contract may benefit unduly from a legislator s intervention 3 third a perception that campaign contributions purchase influence may lead to increased tolerance of corruption in the private sector a desire to control campaign spending has spawned many initiatives to limit both campaign contributions and spending beginning with the passage of the federal election campaign act feca political action committees pacs can contribute at most 5 000 per election to a candidate while individuals can contribute at most 1 000 restrictions have also been put on in kind contributions making it more difficult to circumvent these limits 4 while direct restrictions on campaign spending have proven difficult to implement recent initiatives aim to impose voluntary spending limits and stricter limits on contributions 5 despite the existing legislation and the proposals to limit contributions little is known about the impact of contribution limits on aggregate expenditures while it is intuitively appealing that aggregate expenditures would drop we challenge that intuition here we study a lobbying game and show that a cap on individual lobbyists expenditures may have the perverse effect of increasing aggregate expenditures and loweri this abstract was borrowed from another version of this item

is the minimum wage a pull factor for immigrants in this article the author studies the effects of the minimum wage on immigration he develops an analytical framework in which immigration is a function of the expected wage in the region of destination in the analysis the author exploits the state variation in expected wages stemming from the changes in the u s federal minimum wage during 1996 1997 and 2007 2009 the author addresses endogeneity between immigration and the expected wage using an instrumental variable approach his results provide consistent evidence that the policy induced a sizeable flow of low skilled immigrants to the united states in both periods this pull is attributable to the minimum wage increasing immigrants wages without harming their potential employment outcomes the author corroborates these findings by showing that the policy did not have any impact on the flow of high skilled immigrants the effect on low skilled immigration is also found when the interstate mobility of immigrants is considered finally changes in the minimum wage only attracted legal immigrants while undocumented immigrants were not affected

the effects of minimum wages on wage dispersion and employment evidence from the u k wages councils using data on wages council coverage from the united kingdom new earnings survey the authors examine the impact of mandated minimum wages on wage dispersion and employment in the united kingdom in the 1980s they find evidence that a dramatic decline in the toughness of the regulation imposed by the wages councils through the 1980s a decline that is in the level of the minimum wage relative to the average wage significantly contributed to widening wage dispersion over those years there is however no evidence of an increase in employment resulting from the weakening bite of the wages council minimum pay rates instead consistent with the conclusions of several recent u s studies the findings suggest that the minimum wage had either no effect or a positive effect on employment

the optimal prize structure of symmetric tullock contests we show that the optimal prize structure of symmetric n player tullock tournaments assigns the entire prize pool to the winner provided that a symmetric pure strategy equilibrium exists if such an equilibrium fails to exist under the winner take all structure we construct the optimal prize structure which improves existence conditions by dampening efforts if no such optimal equilibrium exists no symmetric pure strategy equilibrium induces positive efforts

how to split the pie optimal rewards in dynamic multi battle competitions abstract multi battle competitions are ubiquitous in real life in this paper we examine the effort maximizing reward design in sequentially played multi battle competitions between two players the organizer has a fixed prize budget and rewards players contingent on the number of battles they win in a three battle contest a full spectrum of contest technologies in the tullock family is accommodated we find that the optimal design varies with the discriminatory power of the contest technology in particular when it is in the low range winner take all is optimal for the intermediate range as discriminatory power increases the optimal prize structure evolves continuously from winner take all to the proportional division rule due to the need to mitigate the growing momentum discouragement effect for the high range a wide span of prize structures extracts full surplus and is thus optimal several robustness checks confirm that mitigating the momentum discouragement effect is essential for effort maximizing prize design in dynamic multi battle contests

linking individual and collective contests through noise level and sharing rules we propose the use of nitzan s 1991 sharing rule in collective contests as a tractable way of modelling individual contests this proposal i tractably introduces noise in tullock contests when no closed form solution in pure strategies exists ii satisfies the important property of homogeneity of degree zero iii can be effort or noise equivalent to a standard tullock contest

dissipation of contestable rents by small numbers of contenders the theory of rent seeking with its origins in the observations of gordon tullock 1967 or to use jagdish bhagwati s 1982 proposed term the theory of directly unproductive profit seeking activities is concerned with the potentially adverse effects on resource allocation of incentives to cap ture and defend artificially contrived rents and transfers the scope for so cial loss proposed by the theory derives from the relation between the value of a contestable prize and the value of the resources attracted into the con test to determine the beneficiary of the prize underlying this social loss is a specification of how rational behavior by optimizing agents links the value of the prize sought to the resources expended it has been traditional to assume competitive behavior in describing the activities of lobbying and influence seeking then if some further condi tions are satisfied l the total value of the resources expended precisely equals the value of the prize sought so dissipation is complete 2 conse quently the social cost associated with contestability of a rent can be in ferred from the value of the rent itself and the detailed and hard to come by information on individual outlays made in the course of the contest be comes unnecessary by basing their analyses on competitive dissipation contributors to the rent seeking literature see the review by robert tollison 1982 have been able to presume that the observed value of a contested rent is an exact measure of the associated social cost of monopoly power or regu lation similarly in the trade theoretic literature where the rights contested are to quota premia or revenues from trade taxes krueger 1974 bhagwati

what have macroeconomists learned about business cycles from the study of seasonal cycles this paper argues that analysis of seasonal fluctuations can shed light on the nature of business cycle fluctuations the fundamental reason is that in many instances identifying restrictions about seasonal fluctuations are more believable than analogous restrictions about nonseasonal fluctuations the authors show that seasonal fluctuations provide good examples of preference shifts and synergistic equilibria they also find evidence against production smoothing and in favor of unmeasured variation in labor and capital utilization in some industries capacity constraints appear to bind copyright 1996 by mit press

rent seeking mechanism for safety supervision in the chinese coal industry based on a tripartite game model abstract there are extensive governmental rent seeking activities in safety supervision of the chinese coal industry the rents come from industry safety barriers low resource taxes and privilege policies for coalmining enterprises the rent seeking mechanism was analyzed using a model comprising dynamic games with incomplete information the equilibrium results indicate that the probability of national supervision is influenced by penalties and bribery there is negative correlation with penalties and positive correlation with bribery the rent seeking probability of a governmental safety supervision department is influenced by several factors and positively correlates with the cost of national supervision the probability of bribery of coalmining enterprises is influenced by several factors and positively correlates with wages of governmental departments and a reasonable rent seeking range reversed rent seeking reduces the probability of bribery but it s not worth recommending some recommendations are proposed

uniqueness of equilibrium in two player asymmetric tullock contests with intermediate discriminatory power abstract this paper provides a different approach to establish the uniqueness of equilibrium in tullock contests between two players with asymmetric valuations when the discriminatory power r is between 1 and 2 our result complements that of ewerhart 2017 in filling up the remaining gap in the literature on the uniqueness of equilibrium in two player asymmetric tullock contests

on seasonal cycles unit roots and mean shifts the interpretation of seasonality in terms of economic behavior depends on the form of the econometric time series model that allows for a description of seasonality popular models often assume ei

minimum wages and spatial equilibrium theory and evidence this paper introduces a spatial equilibrium model that relates earnings employment and internal migration responses to minimum wage increases population moves to or away from regions that increa

taxation of rent seeking activities we consider taxes on firms which engage in rent seeking contests the taxes can be on realized profits or on rent seeking expenditures the prize can be awarded to either the highest bidder or to a firm with probability proportional to its share of total spending on lobbying we find the conditions under which taxes do not reduce rent seeking effort generate tax revenue with no tax burden and cause no reduction in the profits of firms

the lifeboat problem abstract we study an all pay contest with multiple identical prizes lifeboat seats prizes are partitioned into subsets of prizes lifeboats players play a two stage game first each player chooses an element of the partition a lifeboat then each player competes for a prize in the subset chosen a seat we characterize and compare the subgame perfect equilibria in which all players employ pure strategies or all players play identical mixed strategies in the first stage the partitioning of prizes can lead to coordination failure when players employ nondegenerate mixed strategies in these equilibria some rents are sheltered and rent dissipation is reduced

the existence of equilibrium in discontinuous economic games ii applications in part i of this study we established two existence theorems for mixed strategy equilibrium in games with discontinuous payoff functions see theorems 4 4 and 5 5 in dasgupta and maskin 1986 hereafter d m 1986 in this second part we use the second of these two theorems to prove the existence of mixed strategy equilibrium in some wellknown discontinuous economic games that fail to have pure strategy equilibria the models we analyse are the bertrand edgeworth example of price setting duopolists with capacity constraints see section 2 2 price competition among firms producing differentiated products hotelling 1929 and d aspremont gabszewicz and thisse 1979 see section 2 3 spatial competition eaton and lipsey 1975 and shaked 1975 see section 3 and models of market dependent information rothschild and stiglitz 1976 and wilson 1977 section 4 the paper concludes section 5 with a classification of these models

disclosure policy in tullock contests with asymmetric stochastic entry we examine how disclosure policy can be optimally designed to incentivize contestants when their participation is exogenously stochastic in a generalized tullock contest setting with two players who are asymmetric in both their values and entry probabilities we fully characterize the necessary and sufficient conditions under which no disclosure dominates full disclosure we find that the comparison depends solely on a balance effect exercised by entry probabilities on the expected total effort the optimal disclosure policy must better balance the competition these conditions continue to hold when the precision r of tullock contests is endogenously chosen by the designer

the enduring impact of the american dust bowl short and long run adjustments to environmental catastrophe the 1930 s american dust bowl was an environmental catastrophe that greatly eroded sections of the plains analyzing new data collected to identify low medium and high erosion counties the dust bowl is estimated to have immediately substantially and persistently reduced agricultural land values and revenues during the depression and through at least the 1950 s there was limited reallocation of farmland from activities that became relatively less productive agricultural adjustments such as reallocating land from crops to livestock recovered only 14 to 28 of the initial agricultural cost the economy adjusted predominately through migration rather than through capital inows and increased industry

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

on equilibrium player ordering in dynamic team contests we study equilibrium player ordering in a dynamic all pay contest between two teams the contest lasts two periods and each team consists of two players who perform in different periods on behalf of their teams the team with the higher aggregate output wins the prize which is a public good to its players each team has one stronger player and one weaker player and the two teams can differ in their values of the prize the teams maximize their winning odds by strategically assigning their players to different periods we find that when the intrateam heterogeneity in player ability is not excessive the teams would allocate their stronger players to the late positions as the anchormen when both the intrateam ability gap and interteam heterogeneity in teams values become excessively large the team with high value always places its stronger player in the early position who will place a large bid to preempt late competition jel c7 d7 d8

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

rent seeking aspects of political advertising political contests have all the usual characteristics of rent seeking games characterized in the recent volume edited by buchanan tollison and tullock 1980 that is to say resources are committed to a distributive contest where the social pie is not necessarily enlarged but rather divided up a policy enacted via a winner take all apportioning since political advertising is one method of influencing electoral outcomes we might expect competitive political advertising to exhibit rent seeking losses of the usual sort the extent of the rent seeking losses associated with political advertising depends upon the extent to which advertising affects voter perceptions of the relative merits of electoral alternatives political proponents may well completely dissipate any electoral rents at stake through their advertising efforts yet still increase social welfare if political advertisments provide sufficiently valuable information to the electorate on the other hand if advertising has no effect on voter perceptions or provides information of dubious value then rent dissipating advertising may generate substantial rent seeking losses

difference form contests and the robustness of all pay auctions abstract in much of the existing literature on rent seeking games the outcome of the contest is either infinitely sensitive or relatively insensitive to contestants efforts the current paper presents a family of contest games that permit characterization of equilibrium for all levels of sensitivity of the outcome to contestants efforts specifically the outcome of the contest depends on the difference between efforts which encompass the lottery and the all pay auction as polar cases the equilibrium converges to that of the all pay auction as the probability of winning the prize grows infinitely sensitive to one s effort and the main qualitative features of equilibrium persist over a large parameter region journal of economic literature classification numbers d44 d72

the alaskan labor market during the pipeline era built between 1974 and 1977 the trans alaska pipeline was the largest privately financed construction project in world history the alaskan labor market during the pipeline era provides an ideal opportunity to view labor market responses to a large anticipated and temporary shock to labor demand the paper presents several theoretical models of market responses to temporary demand shocks and then assesses the ability of each model to explain the alaskan data among the findings are that alaskan wages were very flexible labor supply was quite elastic on both the intensive hours per worker and extensive number of workers margins and even a major short run demand shock need not have a long run impact

an approximate solution to rent seeking contests with private information abstract we propose an approximate solution to rent seeking contests in which participants have heterogeneous and private valuations the procedure only requires common knowledge about the mean of the distribution of valuations we obtain a closed form expression for an agent s level of investment and subject it to comparative statics analysis we then assess the performance of the model and find that the proposed solution provides a remarkably effective approximation of the optimal solution for a wide range of parameter specifications

would you trust lobbies we consider the regulatory problem to approve or to ban a new product technology in the context of scientific controversy about its detrimental environmental and or health effects we formalize the regulator s decision making process as a tullock contest towards a theory of the rent seeking society texas a m university press texas 1980 the contestants being an industrial lobby representing the economic agents who have developed the new product technology and an environmental lobby representing the economic agents who will be harmed by the product or technology assuming that the industrial lobby has private information about the unfavorable environmental and or health effects but can be held liable for damage ex post we derive the equilibrium properties of the contest in particular we derive conditions under which it is socially preferable for the regulator to decide according to the contest s outcome rather than according to an ex ante cost benefit analysis using his prior beliefs we find that the contest outperforms the ex ante cost benefit analysis only if the risk of judgment proofness is not too high

rigging the lobbying process an application of the all pay auction textabstractin a world where a politician can explicitly auction off a prize to the high bidder the standard auction literature can be used to analyse political behavior the justice system however precludes politicians from explicitly selling the prize to the highest bidder thus politicians cannot let it become public knowledge that they are in the business of selling political favors an institution has emerged in political markets to overcome this constraint which are termed as lobbying lobbyists make implicit payments to the politician through campaign contributions if these up front payments were rebated to those failing to receive the prize it would be clear that the politician was selling favors this article has examined an interesting principle arising in all pay auctions this principle states that a politician wishing to maximize political rents may find it in his best interest to exclude certain lobbyists from participating in the lobbying process particularly lobbyists valuing most the political prize

the existence of equilibrium in discontinuous economic games i theory the article presents information about the existence of equilibrium in discontinuous economic games in this paper and its sequel presents study the existence of nash equilibrium in games where agents payoff functions are discontinuous the enquiry is motivated by a number of recent studies that have uncovered serious existence problems in seemingly innocuous economic games in the sequel to this paper authors have explained the utility function in the economic games referred to earlier are neither continuous nor quasi concave however they demonstrate that the payoff functions in mildly modified versions of these constructs exhibit two weaker forms of continuity which together with the requirement of quasi concavity suffice for the existence of an equilibrium from this one may conclude that at least in the modified versions of these models discontinuities in the payoff functions are not the real source of the problem rather it is the failure of the payoff functions to the quasi concave which is responsible for the non existence of equilibrium these observations bear on the existence of nash equilibrium in pure strategies

recent immigrants as labor market arbitrageurs evidence from the minimum wage this paper investigates the local labor supply effects of changes to the minimum wage by examining the response of low skilled immigrants location decisions canonical models emphasize the importance of labor mobility when evaluating the employment effects of the minimum wage yet few studies address this outcome directly low skilled immigrant populations shift toward labor markets with stagnant minimum wages and this result is robust to a number of alternative interpretations this mobility provides behavior based evidence in favor of a non trivial negative employment effect of the minimum wage further it reduces the estimated demand elasticity using teens employment losses among native teens are substantially larger in states that have historically attracted few immigrant residents

the lottery blotto game in this paper we relax the colonel blotto game assumption that for a given battle the player who allocates the higher measure of resources wins that battle we assume that for a given battle the colonel who allocates the higher measure of resources is more likely to win we have a simpler model for which we are able to compute all nash equilibria in pure strategies for any valuations profile that players might have something that is not possible for the original blotto game

a general analysis of rent seeking games in this paper we reconsider the basic model of efficient rent seeking we stress the importance of the shape of the players reaction curve in order to understand the impact of the technology of rent seeking on the structure of the outcome of the game we give a complete characterization of the pure strategy equilibria moreover the possibility of preemption by a stakelberg leader is discussed according to the nature of the technology of rent seeking available to the agents

all pay contests this paper studies a class of games all pay contests which capture general asymmetries and sunk investments inherent in scenarios such as lobbying competition for market power labor market tournaments and r d races players compete for one of several identical prizes by choosing a score conditional on winning or losing it is weakly better to do so with a lower score this formulation allows for differing production technologies costs of capital prior investments attitudes toward risk and conditional and unconditional investments among others i provide a closed form formula for players equilibrium payoffs and analyze player participation a special case of contests is multiprize complete information all pay auctions

spurious deterministic seasonality it is sometimes assumed that the r2 of a regression of a first order differenced time series on seasonal dummy variables reflects the amount of seasonal fluctuations that can be explained by deterministic variation in the series in this paper we show that neglecting the presence of seasonal unit roots may yield spuriously high values of this coefficient

minimum wage policy with optimal taxes and unemployment abstract using a search model i derive a formula that links the welfare gains from the minimum wage to its effect on low skilled labor force participation and employment this formula shows that the minimum wage is welfare improving if pushing the low skilled labor market tightness downwards brings it closer to its efficient level i estimate the causal effect of the minimum wage on low skilled labor force participation and employment using federal and state minimum wage variation i discuss the policy implications of my estimates when viewed through the lens of the marginal welfare gain formula

why do countries and industries with large seasonal cycles also have large business cycles we show that there is a strong positive correlation across countries and industries between the standard deviation of the seasonal component and the standard deviation of the nonseasonal component of aggregate variables after documenting this stylized fact we discuss possible explanations and develop a model that generates our empirical finding the main feature of the model is that firms endogenously choose their degree of technological flexibility as a function of the amounts of seasonal and nonseasonal variation in demand although this model is intended to be illustrative we find evidence supporting one of its key empirical implications

the economic effects of a citywide minimum wage this paper presents the first study of the economic effects of a citywide minimum wage san francisco s adoption of an indexed minimum wage set at 8 50 in 2004 and 9 14 by 2007 compared to earli

revisiting the minimum wage employment debate throwing out the baby with the bathwater we revisit the minimum wage employment debate which is as old as the department of labor in particular we assess new studies claiming that the standard panel data approach used in much of the new minimum wage research is flawed because it fails to account for spatial heterogeneity these new studies use research designs intended to control for this heterogeneity and conclude that minimum wages in the united states have not reduced employment we explore the ability of these research designs to isolate reliable identifying information and test the untested assumptions in this new research about the construction of better control groups our evidence points to serious problems with these research designs we conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage

lottery versus all pay auction models of lobbying i first provide a complete characterization of the unique equilibrium of the lottery game by n lobbyists with asymmetric valuations and then compare the lottery and the all pay auction models of lobbying i show that the exclusion principle discovered by baye kovenock and de vries 1993 for all pay auction does not apply to lottery i also show that the perverse effect that an exogenous cap may increase the total lobbying expenditure in a two bidder all pay auction discovered by che and gale 1998 does not apply to lottery

rent seeking with asymmetric valuations this paper analyzes tullock s rent seeking game with asymmetric valuations for a variable range of the returns to scale parameter a necessary and sufficient condition for a unique pure strategy nash equilibrium is established equilibrium effort and expected profits are determined and subjected to comparative statics analysis increasing the underdog s valuation induces both players to increase their efforts increasing the favorite s valuation increases his effort but decreases the effort of the underdog expected profits increase with a player s valuation but decreases with the valuation of the competitor the impact of the returns to scale parameter is also analyzed

to deter or to moderate alliance formation in contests with incomplete information we consider two players choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally when deciding on alliance formation players anticipate the self selection of other players and the informational value of own and other players choices in the absence of these signaling effects strong players have an incentive to stand alone which leads to a separating equilibrium this separating equilibrium can be destabilized by deception incentives if beliefs are updated on the basis of endogenous alliance formation choices weak players may find it attractive to appear strong in order to deter competitors from positive effort choices strong players may find it attractive to appear weak in order to give their competitors a false sense of security and then beat them with little effort moreover appearing weak allows players to free ride when alliances are formed jel d72 d74