Two Differential Games Between Rent-Seeking Politicians and Capitalists: Implications for Economic Growth
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We comparatively study two differential games between politicians and capitalists in terms of reducing rent-seeking distortions and stimulating economic growth. These two games imply two relationships top-down authority and rational cooperation between politicians and capitalists. In the current context, we prove that cooperation leads to faster growth than does authority, and simultaneously satisfies individual rationality, group rationality, Pareto efficiency and sub-game consistency. We thus show that setting a bargaining table between capitalists and politicians may create desirable incentives for reducing rent-seeking distortions, developing the spirit of capitalism and stimulating economic growth.
