DP3050 Investment in the Absence of Property Rights: The Role of Incumbency Advantages

Author(s): Kai A. Konrad
Publication Date: November 2001
Keyword(s): contests, endogenous property rights, incumbency advantage, investment, proprietry states
JEL(s): D23, D72, D74, H54, O10, P16
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3050

In many situations the individuals who can generate some output must enter a contest for appropriating this output. This Paper analyses the investment incentives of such agents and the role of incumbency advantages in the contest. Depending on the advantages, an increase in the productivity of the investment can decrease or increase the amount of investment. The results are applied to autocrats' investment behaviour and job specific investment in organizations.