This paper analyzes the occurrence of the group-size paradox in situations in which
groups compete for rents, allowing for degrees of rivalness of the rent among group members.
We provide two intuitive criteria for the group-impact function which for groups
with homogeneous valuations of the rent determine whether there are advantages or disadvantages
for larger groups: social-interactions effects and returns to scale. For groups
with heterogeneous valuations, the complementarity of group members’ efforts and the
composition of valuations are shown to play a role as further factors.
(Coauthor Hendrik Rommeswinkel)