Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96014
Authors: 
Nitzan, Shmuel
Kriesler, Kobi
Year of Publication: 
2010
Series/Report no.: 
Working Papers, Bar-Ilan University, Department of Economics 2010-06
Abstract: 
A competitive rent-seeking club (CRSC) offers its members the chance of winning a prize (status, position, privilege) by being selected, typically, by a civil servant or a politician. The selector replaces in our setting the usual contest success function; instead of determining the winner on the basis of the club-members' efforts, he selects the winner on the basis of quality. This paper focuses on the effect of incomplete search of the selector on the efficiency of democratic self-governing and decentralized RSC's that control admittance to the club and its transparency, assuming that quality of their members is fixed. The incomplete search of the selector is assumed to take the simple form of fixed random sampling of the contestants - the members of the CRSC. Our results imply that, even when active rent-seeking expenditures are disregarded, the decisions of CRSC's regarding their composition and transparency tend to reduce quality and are therefore inefficient.
Subjects: 
competitive rent-seeking clubs
self governance
decentralized decisions
quality competition
selection by fixed random sampling
simple majority rule
endogenous membership determination
transparency
inefficiency
quality decay
JEL: 
D70
D71
D72
Document Type: 
Working Paper

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