Companion to the Political Economy of Rent Seeking
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Companion to the Political Economy of Rent Seeking

Edited by Roger D. Congleton and Arye L. Hillman

The quest for benefit from existing wealth or by seeking privileged benefit through influence over policy is known as rent seeking. Much rent seeking activity involves government and political decisions and is therefore in the domain of political economy, although it can also take place in personal relations and within firms and bureaucracies. Rent seeking, which involves the unproductive use of resources, is however primarily associated with policies that create rents as well as rent extraction or political benefit for the creators of rents. The contributions in this outstanding volume provide an accompaniment or “companion” to the literature on rent seeking and the related political economy of rent creation and extraction. The chapters, written by leading scholars in the field, demonstrate the centrality of rent-related incentives to the study of economics, politics, culture, public administration and history.
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Chapter 3: The theory of contests: a unified model and review of the literature

Ngo Van Long


Contests are a pervasive fact of life, both in the human and the non-human spheres. Frank Knight (1935, p. 301) saw games of contest as an essential feature of economic life: ‘The activity which we call economic, whether of production or of consumption or of the two together, is also, if we look below the surface, to be interpreted largely by the motives of the competitive contest or game, rather than those of mechanical utility functions to be maximized.’ In a similar fashion, Veblen (1924) emphasized the pervasiveness of emulation, which he defined as ‘the stimulus of an invidious comparison which prompts us to outdo those with whom we are in the habit of classing ourselves’. He believed that ‘with the exception of the instinct for self-preservation, the propensity for emulation is probably the strongest and most alert and persistent of economic motives proper’. Emulation can lead to direct contests, and to wasteful use of resources.

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