Endogenous sharing rules in collective rent seeking: A graphic characterization

Abstract

This note examines collective rent seeking with endogenous choice of intra-group sharing rules. Building on Davis and Reilly (1999) and paying full attention to non-negativity constraints, this note derives the Nash equilibrium in the two-stage collective rent seek - ing with endogenous intra-group sharing rules. Graphic methods are employed in deriving the equilibrium. While Nitzan (1991) and Davis and Reilly (1999) focus on the case where each group has more than a single member, the present paper allows for the possi - bility that one of the groups consists of a single member. In compe - tition between symmetric groups, the endogenous intra-group shar - ing rule is to distribute the rent solely based on relative effort. In competition between two groups asymmetric in size, the smaller group with at least two members distributes the rent solely based on relative effort, while the larger group adopts the mixed rule that distributes part of the rent according to relative effort and the re - sidual equally among the group members