Governing Interest Groups and Rent Dissipation

Gil S. Epstein, Yosef Mealem

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

In a contest of 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 are not. 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 of the groups may also decrease.

Original languageEnglish
Pages (from-to)423-440
Number of pages18
JournalJournal of Public Economic Theory
Volume14
Issue number3
DOIs
StatePublished - Jun 2012

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