Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 749: Rent Seeking and Organizational Structure

Karl Wärneryd ()
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Karl Wärneryd: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: A hierarchically structured rent-seeking contest may be associated with lower equilibrium expenditure than a corresponding flat contest. In this chapter we discuss how this fact may be used to explain the structure of organizations such as firms, including why firms commonly have outside owners.

Keywords: rent seeking; contests; hierarchy; ownership of firms

JEL-codes: D23; D74; G32; G34; L22

16 pages, June 2, 2014

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