A culture of rent seeking

Public Choice - Tullock [J Dev Econ 67(2):455–470, 1967] introduced the concept of rent seeking and highlighted the social costs associated with collecting and lobbying for or against...     

Rent seeking and market competition

This paper emphasizes that political behavior of interest groups is a result of economic calculation, and therefore is affected by the market conditions under which they operate. We develop a two-stage game to link political and market decision-making. We find that if unproductive rent-seekingdirectly contributes to rent-seekers' market operations, then their lobbying efforts will be excessive if the number of outsiders is relatively large, restrained if it is relatively small. If rent-seekingdirectly impairs rent-seekers' market operations, the above described behavior will be reversed. The analysis also reveals that as wasteful rent-seeking may increase rent-seeker's production cost, market competition shifts production from now less efficient rent-seekers to their non-rent-seeking rivals. Welfare gains from this shift may overshadow the direct waste of influence activities.     

The economic theory of rent seeking

Tullock’s concept of rent seeking was the first statement of a quantitative principle about the social costs of such activities as lobbying and favor seeking. As such, this part of Tullock’s legacy to modern economics is one of his most important contributions.     

Monopoly rent seeking under conditions of uncertainty

In recent years, economists have come to recognize that the competition to obtain monopoly rents, i.e., rent seeking, may consume resources whose value greatly exceeds that associated with traditionally measured deadweight welfare loss triangles (Tollison, 1982). Early articles by Tullock (1967), Krueger (1974), and Posner (1975) all concluded that this competition would exactly dissipate the rents sought. Later articles by Tullock (1980) and Baysinger and Tollison (1980) modified that original conclusion. The present paper develops a model which raises further doubts about the complete transformation of rents into costs. The emphasis of the analytical framework presented is on the implications of the fact that rent seekers may typically be uncertain about being able to maintain a monopoly position even if they are initially successful in attaining one. It is demonstrated that when there is even a moderate level of uncertainty about retention, the likely effect will be a relatively large reduction in the magnitude of resources invested in rent seeking activities. In addition, it is shown that the size of this waste of resources depends somewhat on the extent to which rent seeking opportunities involve once and for all transfers as opposed to flows of rents. Finally, in those cases where a flow of rents is at stake, it is shown that considerable social waste might be eliminated through institutional changes which would reduce the subjective probabilities of potential monopolists retaining their rent streams once attained.     

Marginal vote seeking in multi member districts

Differences in the number of seats that similar vote shares can deliver make some votes more marginal than others. In multi-member district systems, high-marginal-return votes are very volatile and research has assumed that parties do not go after them. This paper rejects this assumption, introducing a theory of marginal vote seeking across multi-member districts. By leveraging a novel mathematical algorithm and a cross sectional data set, we find evidence that parties seek marginal votes in these systems despite their volatility. In the case of the poverty alleviation programs used here, their use to attempt to secure marginal votes overwhelms the program’s poverty alleviation goals. Estimates suggest that a district’s share of a program’s budget can increase by as much as 8% simply because of this district’s likelihood of delivering marginal votes.     

Free-riding on rent seeking—an empirical analysis

The Common Agricultural Policy is modelled as a club good providing the European Union (EU) farmer with financial benefits. We build an economic model which explains how much farmers in individual EU countries invest in rent-seeking activities in order to test for free-riding behaviour on lobbying costs. For our investigation we group the EU member countries by farm structure, and the type of benefit received. We explain the fees paid by farmers for lobbying by other countries’ fees, political variables, and country and regional agricultural characteristics. The model shows that some member countries free ride on others suggesting a form of policy path dependency.     

Choosing a media outlet when seeking public approval

This paper considers the media outlet choice of a politician who seeks public approval for a political agenda in a broadcast interview. The available media outlets differ in their “toughness” towards the politician. An interview with a tougher media outlet is more informative, but is also more likely to yield a negative outcome. The choice of the media outlet determines the accuracy of the information that flows to the public and the volume of citizens who consume that information. The analysis shows that (1) politicians who enjoy sufficient popularity are likely to avoid tough media outlets, (2) when seeking approval for controversial agendas, politicians are more likely to appear in tougher outlets.     

Bequests, sibling rivalry, and rent seeking

We examine bequest-sharing rules where sibling rivalry creates wasteful competition for intergenerational transfers. We show that equal division of bequests minimizes rent-seeking expenditures by siblings while primogeniture maximizes rent-seeking costs. Our results lend theoretical support to the empirical findings of equal bequests without appeal to complex models of the parent-child relationship.     

Rent seeking and the welfare cost of trade barriers

This paper estimates the potential social cost of trade barriers using the Harberger and the Tullock/Posner approaches for a sample of U.S. food and tobacco manufacturing industries. In addition, it tests the relationship between the computed welfare losses and special-interest political activity (PAC contributions). If all rents were dissipated through rent seeking, the social cost of trade barriers would be about 12.5 percent of domestic consumption and would be particularly large for sugar and milk products where quotas are the main instrument of protection. Furthermore, the results indicate that welfare losses are positively associated with industry lobbying but the strength of such association is strongly dependent on industry concentration.     

Rent seeking and the decline of the Florentine school

Public Choice - Economists have claimed that the invisible hand of competition is behind the historical episodes of outstanding artistic achievement, from Shakespearean theater to musical...     

A general model of rent seeking for public goods

This paper generalizes the model of collective rent-seeking over a public good. Expanding the rent seeker's consumption bundle to include preferences over the public good and a private good, our results suggest collective rent-seeking is positively related to group size. Although free riding exists within a group, there is not a one-for-one tradeoff. In addition, rent seeking increases with wealth. Finally, total effort expended by both groups increases if either group increases in membership size, except in the case of an extremely lopsided contest. The key condition underlying these results is that the marginal utility of the public good is not inversely related to the private good.     

Rent seeking and rent setting with asymmetric effectiveness of lobbying

This paper provides a more general model of the determination of rent-seeking costs by combining the following features: endogenous rent determination, asymmetric effectiveness of contending agents in their lobbying efforts, and multiple periods. In doing so, the paper generalizes some aspects of the work of Applelbaum and Katz (1987), Rogerson (1982), Leininger (1992) and Kohli (1992). Some results obtained are: (i) in the short run, when the regulator's salary is higher than in an alternative occupation, both the per unit cost of rent-seeking and the total rent set by regulator are highest for the same value of the relative effectiveness parameter; (ii) in the long run, an increase in the effectiveness parameter leads to a reduction in the social costs of rent seeking; (iii) in a repeated game, the equilibrium rent is lower the higher is the regulator's discount factor.     

Behavioral symmetry,rent seeking,and the Republic of Science

The Olsonian distinction between roving and stationary bandits outlines the rationale behind the transition from anarchy to the emergence of the predatory state. This two-bandit model may, however, be expanded to include more bandit types. In the case of Viking Age England, local English kings were unable to monopolize violence and defend their realms against competing Viking raiders. As the Vikings’ time horizon grew, so did the accumulated value of more formal taxation, and bandit types evolved in four steps. The first step is the Olsonian roving bandit, who executed Viking hit-and-run attacks and plunders during the second half of the tenth century. The second step is the gafol bandit; gafol is payment for leaving, paid to, among others, Swein Forkbeard. The third step is the heregeld bandit; heregeld is a tax to support an army for hire; most notably Thorkell the Tall’s. The fourth step is the Olsonian stationary bandit, i.e. the strongest military leader among the Vikings, Cnut the Great, settled down as the new king. Overall, the Olsonian two-bandit model can be expanded to a four-bandit staircase model, in which the new gafol and heregeld bandit types explain the steps from anarchy and short-run raiding to long-run formal taxation in a predatory state.

     

Rent seeking and hidden in-kind resource distortion: Some empirical evidence

We wish to thank John Jackson, Robert Hebert, Gordon Tullock and an anonymous referee for helpful comments on earlier draft of the paper.     

Gaining and seeking access: The European adaptation of domestic interest associations

Abstract. The multilevel governance literature on European politics argues that supranational governing arrangements have increased their autonomy vis–à–vis national governments. As private interests increasingly bypass national levels and become active in transnational Euro–level policy networks, national governments are no longer the sole interface between supranational and national levels. In contrast, the European Union might also be conceptualised as a two–level interstate negotiation system, an approach assuming that interests are formed and aggregated at the national level. Societal interests enter the fray of European negotiations via national executives, and private interests bypassing the national level are considered as a rather marginal, even irrelevant, phenomenon. In addition, both accounts expect different outcomes regarding which sorts of private interests – diffuse or specific – seek and gain access to both domestic and European public actors. By analysing the varying network strategies of domestic private actors, in particular interest associations, this article explores some propositions held by these two approaches. After a more comprehensive outline of some hypotheses, evidence collected among public and private actors at both the domestic (Belgian) and European levels will be analysed. In general, the results suggest that Euro–level networks of domestic interests are substantially related to their structural location within the domestic realm, that network strategies tend to be quite bureaucratic and that the sort of interest represented – diffuse or specific – has a considerable effect on gaining and seeking access.