Rent dissipation in difference-form contests (Q7029978)

The author consider rent-seeking contests where the impact function, which measures how much impact effort has, takes an exponential form. More precisely, this paper considers rent dissipation in difference-form contests. Rent dissipation is an important topic in contest theory and the key motivation behind \textit{G. Tullock}'s [West. Econ. J. 5, No. 3, 224--232 (1967; \url{doi:10.1111/j.1465-7295.1967.tb01923.x})] original analysis of rent-seeking. It is assumed that the cost function also takes an exponential form. The cost functions in proposed model are strictly convex. \N\NMoreover, the author require that the elasticity of the cost function is greater than that of the impact function. Using these assumptions the closed-form expressions for pure strategy Nash equilibrium and rent dissipation at that equilibrium are derived. The main contribution of this paper is to show that when the number of players is sufficiently large, rent dissipation in a difference form contest can be approximated by the ratio of the elasticity of the impact function to that of the cost function. The reader can find proofs of the main statements in the attached specific Appendix.