Collective rent seeking and division of labor

The article analyzes division of labor within multiple groups engaged in collective rent seeking through time. Each agent seeks membership in one of two subgroups within each group, conveniently labelled a leader-subgroup and a follower-subgroup. The within-group generated payoffs are used as input in the between-group competition for the other groups' payoffs and an external rent. Within-group egalitarian allocation, but not relative-effort allocation, alleviates leadership struggle if the rent is large or the group is moderately more decisive than the other groups. The group employing a more egalitarian sharing rule than the other groups alleviates its leadership struggle more successfully. The Folk theorem is used to show the conditions under which leadership struggle gets intensified or alleviated.     

The division of labor and the extent of the market

Summary. A firms degree of specialization is modeled as the number of different goods it produces. When a firm chooses its degree of specialization, it faces a tradeoff between the fixed cost and the marginal cost of production. A firms degree of specialization is shown to increase with the extent of the market. Meanwhile, the real wage rate, as a measure of the extent of the market, is endogenously determined in the model and is shown to increase with the division of labor.Received: 29 April 2002, Revised: 18 June 2003, JEL Classification Numbers: A10.The author thanks an anonymous referee and Antonio Ciccone for their very valuable and constructive suggestions. I thank Deborah Minehart, Robert Schwab, and Daniel Vincent for their valuable guidance and advice. I also thank Mingchao Chen, David Selover, and Xiaokai Yang for their helpful advice.