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Economic Policy, Problem 3-1,Exercise sheet 3: Interest Groups and Special-Interest Politics

Dokument-Nr.:  F-AHVU

UNIDOG-Autor: Unispezi

Zugehöriger Dozent(en):
(Nicht Verfasser des Dokuments)

Dr. Lars Siemers/ Arthur Grigoryan


Kauf- / Tauschwert: 3,00 €
Kategorie: Lösungen und Klausurtipps
Dokument-Typ: Lösungen zu Übungs- und Klausuraufgaben ...
Seiten: 5
Semester: SS2013

Erzielte Note:
1,0

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Inhalt / Beschreibung

Consider 2 energy companies competing for the rights on the oil from a newly discovered oil source. Both are considering to use lobbying in order to increase the probability of obtaining the rights θ . The expected profit functions of the firms A and B are given as follows:  

where LA and LB represent the lobbying investments and R is the expected profit from the oil source. Assume that the firm A leads by choosing the investment LA and the firm B follows with an investment LB . The probability that the firm A wins the rent-seeking contest is given by: A BAL LLαθ+ = where α <1 implies that the first player’s investments are more effective than those of the second and α >1 implies the reverse.


a) Determine the optimal lobbying investments as well as the resulting expected profits for each firm! 

 

b) Comment on the role of the investment effectiveness α with respect to the fact of being leader or follower! 



Vorschau-Ausschnitte


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