Bargaining and rent seeking: Asymmetric equilibria with two investment levels

We consider a Baron-Ferejon-type bargaining model with recognition probabilities determined by a Tullock contest. The contest is conducted once -and -for -all before bargaining a la Yildirim (2010). It is known that for ex -ante symmetric players, there are no symmetric stationary subgame perfect equilibria (SSPE) in pure investment strategies. Here, we show the existence of an asymmetric SSPE, when players are sufficiently patient.