The authors examine the distribution of income when agents allocate their initial endowments between production and appropriation (arms investments, influence or rent-seeking activities). Final output depends on the productive contributions of the agents but is divided between them according to...

A simple duopoly model is constructed in which leader-follower relations arise as part of a subgame-perfect equilibrium in a game of endogenous timing. The author shows that, in the absence of policy intervention, cost asymmetries between firms can help sustain collusive hierarchical...