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Title:Firm Size, Economic Situation and Influence Activities PDF Logo
Authors:Kräkel, Matthias
Issue Date:2006
Series/Report no.:Bonn econ discussion papers 2006,16
Abstract:This paper discusses the optimal firm size in the presence of influence activities, and the level of individual rent-seeking dependent on the economic situation of the firm. Since firm size has a discouraging effect on the level of individual rent-seeking but also a quantity effect as the number of rent-seekers increases, the interplay of both effects determines whether the employer chooses an inefficiently small or large firm size. In the given setting, a bad economic situation leads to both a higher probability of a substantial loss and a reduction of productivity. The productivity effect and the two other effects together determine the optimal level of individual rent-seeking.
Subjects:economic situation
firm size
influence activities
politicking
rent-seeking
JEL:L2
D2
M2
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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