Working Paper: CEPR ID: DP3050
Authors: Kai A. Konrad
Abstract: In many situations the individuals who can generate some output must enter a contest for appropriating this output. This Paper analyses the investment incentives of such agents and the role of incumbency advantages in the contest. Depending on the advantages, an increase in the productivity of the investment can decrease or increase the amount of investment. The results are applied to autocrats' investment behaviour and job specific investment in organizations.
Keywords: Contests; Endogenous Property Rights; Incumbency Advantage; Investment; Proprietary States
JEL Codes: D23; D72; D74; H54; O10; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| appropriation costs (H61) | equilibrium investment (E22) |
| increase in productivity of investments (O49) | equilibrium investment (E22) |
| incumbency advantages (D72) | expected contest effort of rivals (C72) |
| expected contest effort of rivals (C72) | incumbent's expected payoff (D79) |
| size of investment (G31) | expected returns (G17) |
| dictators in proprietary states (P16) | varying investment behaviors (G11) |