Rent-Seeking With Scarce Talent: A Model of Preemptive Hiring
Finance, Real Estate, and Business Law
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.
(2006). Rent-Seeking With Scarce Talent: A Model of Preemptive Hiring. Public Choice, 129(2016-03-04), 475-486.
Available at: https://aquila.usm.edu/fac_pubs/2162