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.
KeywordsNash Equilibrium Pure Strategy Equilibrium Winning Probability Rent Dissipation Tullock Contest
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- 1.Asymmetries in rent-seeking abilities or costs are discussed in Dixit(1987), Allard (1988), Baik and Shogren (1992), Leininger (1993), Baik (1994), and Gradstein (1995); strategic implications of introducing asymmetries in the order of moves are examined in Dixit (1987), Baik and Shogren (1992), and Leininger (1993). Group contests with asymmetric population sizes are discussed in Katz et al. (1990). Nitzan (1991) studies a group contest with asymmetric sharing rules; a two stage group contest of Katz and Tokatlidu (1996) with asymmetric population sizes also generates a contest with an asymmetrically valued prize.Google Scholar
- 3.Nitzan (1994b) uses this approach to reconcile Baik and Shogren (1992) and Leininger (1993).Google Scholar