Oligopolization in collective rent-seeking

In this paper we discuss the issue of when oligopolization in collective rent-seeking occurs, that is, when some groups retire from rent-seeking. A complete characterization of the pure-strategy Nash equilibrium in a collective rent-seeking game among m (≥2) heterogeneous groups is derived. The conditions of oligopolization are derived by using this result and related to the works of Nitzan 9, 10] and Hillman and Riley 3]. Also, the subgame perfect equilibrium of a simple two-stage collective rent-seeking game (Lee 7]) is fully characterized. In this game, it is confirmed that no group retires from the contest in the second stage and oligopolization never occurs. An example of the two-stage collective rent-seeking game with monitoring costs is devised to show the possibilities of oligopolization. Received: 21 September 1999/Accepted: 27 March 2001