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Tullock's Rent-Seeking Contest with a Minimum Expenditure Requirement

L. Schoonbeek and P. Kooreman
Public Choice
Vol. 93, No. 3/4 (1997), pp. 477-486
Published by: Springer
Stable URL: http://www.jstor.org/stable/30024312
Page Count: 10
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Tullock's Rent-Seeking Contest with a Minimum Expenditure Requirement
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Abstract

We consider a rent-seeking contest of the kind introduced by Tullock (1980) in which two players compete for a monopoly rent. We extend the contest by requiring that if a player puts forward an effort, his expenditures must be larger than or equal to some minimum level. We show that, depending on the model parameters, the number of Nash equilibria of the extended model can be zero, one, two or four. Furthermore, it turns out that the extent of rent dissipation in a Nash equilibrium of the extended model can be larger than, equal to, or smaller than the extent of rent dissipation in the unique Nash equilibrium of the original model.

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