Unilateral delegation and reimbursement systems in an environmental conflict

Abstract

How unilateral delegation by a citizens’ group with lower ability than a firm affects individual and total effort and the contest favourite under the two reimbursement systems are examined. A citizens’ group that unilaterally hires a delegate to represent them causes the firm to increase its effort level so that it always exceeds the group's delegate – irrespective of the relative strength of the two parties. In contrast to earlier work without either delegation or reimbursement, a citizens’ group that hires a delegate could now be the contest favourite; although it is more likely to occur under the asymmetric reimbursement rule.

Notes

¹ Assume second-order conditions hold and .