Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22961
Authors: 
Kräkel, Matthias
Year of Publication: 
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

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