More on more efficient rent seeking and strategic behavior in contests: Comment

Abstract

In Leininger (1993) it is shown that the basic presumption that rent seekers will always compete for the first move is unfounded. More specifically, in a two-player two-stage, Tullock’s (1980) type rent-seeking contest the rent seekers agree to move in a particular order. Specifically, assuming that the players decide both on the size of their bids and also on when to make them (early or late), they agree that the weaker player (the one with the lower valuation of the rent and/or with the lower ability to influence the probability of winning in his favor) moves first, i.e., the weaker player becomes the Stackelberg leader in the sequential rent-seeking contest. In other words, in the unique subgame perfect equilibrium of this contest, the weaker player moves first and the stronger player moves second. Furthermore, the equilibrium rent-seeking outlays are lower than the total rent-seeking expenditures in the Nash equilibrium of the simultaneous (non sequential) rent-seeking contest (see Theorem 1 and Theorem 2 in Leininger, 1993).