Rent-Seeking With Scarce Talent: A Model of Preemptive Hiring

Document Type

Article

Publication Date

12-1-2006

Department

Finance, Real Estate, and Business Law

Abstract

In a standard rent-seeking contest, players optimally employ resources in an attempt to obtain the rent. Typically, it is assumed that these resources may be hired at any desired level at some exogenous per-unit cost. In practice, these resources often consist of scarce, talented individuals. We model a rent-seeking contest with scarce talent and find that talent scarcity leads to preemptive hiring by the player receiving the larger rent. This player hires all available talent and wins the contest with probability 1. This is true even when the difference in rents is small.

Publication Title

Public Choice

Volume

129

Issue

2016-03-04

First Page

475

Last Page

486

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