“Value Grabbing”: A Political Ecology of Rent

This paper aims to redress the under-appreciated significance of rent for political ecological analysis. We introduce the notion of value grabbing, defined as the appropriation of (surplus) value through rent. A concept that is analytically distinct from accumulation, rent is both a social relation and a distributional process that is increasingly central to the reproduction of contemporary capitalism. Emphasis is placed on the “grabbing” of value in order to shed light on the processes at work by which surplus value is distributed unevenly between different classes and fractions of classes. A focus on rent within political ecology, we argue, can help us distinguish between two organically related but analytically distinct “moments”: (a) the creation of property rights that establish rent relations and (b) the struggle over the appropriation and distribution of surplus value generated by the rent relation itself. We explore some of the implications of this perspective for understanding new forms of socio-ecological struggles and their varied relations to the state. We maintain that a value-grabbing perspective has far-reaching consequences for political ecology, as it provides a sharp conceptual tool for situating a wide range of socio-ecological conflicts and movements as class struggles over value appropriation and distribution.     

Competitive-share group formation in rent-seeking contests

We examine the possibility of forming a competitive-share group in rent-seeking contests. The competitive-share group has the following characteristics: (a) the group is treated as a single player competing with the nonmembers to win the rent, (b) the members choose their outlays noncooperatively, and (c) the members compete to take larger shares of the rent. We show that the competitive-share group is always formed voluntarily. One important consequence of such group formation is that rent dissipation is less relative to individual rent seeking — in other words, the social cost associated with rent seeking is less.     

Seeking rents in the shadow of Coase

In this paper, we study a two-stage rent-seeking game. In the first stage, contestants compete à-la-Tullock; in the second stage, the winner can resell the rent à-la-Coase. We consider a complete information Tullock game in which the contestants have different valuations for the rent. The analysis focuses on the ex ante effects of a secondary market on efforts, payoffs, rent-dissipation and rent-misallocation. We show that the secondary market, while correcting possible misallocations, may exacerbate rent dissipation. In some situations, the increase in rent dissipation more than offsets the allocative advantage, so that a secondary market might reduce welfare. We further show how the effect of ex post tradeability on welfare depends on the parties’ bargaining power and valuations of the rent, also considering the case of endogenous bargaining power.     

Colluding victims: A public choice analysis of international alliances

Analysis of international alliances is often premised on predicted responses by nation states when nation states are assumed to behave as utility-maximising actors. ‘Large’ allies are exploited by ‘small’ allies when output is a public good. Empirical analysis of defence expenditures in NATO yields results consistent with the proposition that ‘exploitation’ increases as alliance output approximates a pure public good. But why would large countries acquiesce? A public choice analysis offers a different perspective. If producers of armaments are rent seeking, are large allies able to capture rent by incurring a disproportionate share of defence expenditure?     

Privately informed seekers of an uncertain rent

Two departures from antecedent rent-seeking models are invoked: a rent of unknown size is sought, and rent seekers obtain private imperfect estimates of this size. A symmetric equilibrium for a fixed number of rent seekers is characterized, and shown to underdissipate the rent. Then a model of the decision to obtain private information and participate in the rent-seeking contest is built. The symmetric equilibrium participation probability equates expected profit to participation costs. A simple formula for underdissipation results: dissipation is incomplete precisely by the expected aggregate participation costs. If an award mechanism can attain a lower level of dissipation for a fixed number of seekers, then it will raise the endogenous probability of participation, and as a result will dissipate less rent in the equilibrium with an endogenous number of seekers.     

寻租与反寻租:一个理论模型

本文试图对国内学术界偏好使用却又屡被误用的寻租理论作出学术澄清.本文认为,完整、准确的寻租理论应由如下四个命题组成:1.市场主体价值指向的租金非仅一种而是有三种,即分别由创新原因、自然原因和管制原因引致的垄断租金;2.市场主体追求创新租金的寻利行为是自由竞争条件下的正和博弈,而其追逐管制租金的寻租行为则是在不完全竞争条件下的负和博弈;3政府进行制度创新,引导市场主体从寻租走向寻利,可以实现反寻租的目的;4.由于政府同样具有理性经济人特征,通过制度创新进行反寻租有可能引起新的寻租,陷入反寻租的悖论.     

Rent dissipation when rent seekers are budget constrained

In the original Tullock (1975, 1980) game, an individual bidder's probability of winning with a bid b is proportional to b^R, where the exponent reflects economies of scale in rent seeking. Different interpretations can be given to these probabilities. First, one may view R as a reflection of the political culture. Alternatively, one may view R as a choice variable for a politician. Intuition suggests that a society with a high tolerance for the selling of political favors and politicians who are receptive to rent seeking would both induce greater rent-seeking expenditures than other societies, all else equal. This paper shows that a lower value of R can actually lead to more rent dissipation than a higher value. This paper also reinforces two points concerning rent seeking. First, the analysis confirms the robustness of under-dissipation of rents, even in the face of entry. Second, it points out the importance of distinguishing between rent-seeking expenditures and rent dissipation. When bidders must borrow, for example, total expenditure may understate rent dissipation.     

On the limits to rent-seeking waste

The general equilibrium framework developed in this paper for analyzing the limits to rent-seeking waste goes beyond the existing literature by incorporating tax-financed, public subsidies and rent-protecting activities into a rent-seeking environment. We show that the limits to rent-seeking waste depend on the extent to which government subsidizes rent seekers and rent defenders through tax-financed grants, contracts and favors. As observed by Tullock (1967), the diversion of resources toward efforts to acquire a monopoly rent causes a social waste in addition to the excess burden of monopoly pricing measured by the Harberger triangle. In the absence of government subsidies to rent-seeking and under competitive conditions, this additional waste cannot exceed the maximum monopoly rent attainable. However, if government subsidizes expenditures on rent-seeking, then the additional waste can exceed the Tullock rectangle of monopoly rent and, in the limit, equal the economy's maximum potential social surplus.Rent avoidance expenditures reduce the rent to be captured and thus discourage rent-seeking. If rent avoidance is a relatively efficient mechanism for transferring consumer surplus to rent granters, then rent-seeking expenditures are displaced by less wasteful expenditures on rent defending. As a result, under competitive conditions, unsubsidized demand for private rent protection may be socially efficient. Nonetheless, the upper limit to rent-seeking waste depends on constitutionally determined maximum rates of public subsidies to rent-seeking and rent-avoidance activities.     

The Effect of Number and Size of Interest Groups on Social Rent Dissipation

This paper develops two models of the lobbying of interest groups to examine the effect of the number and size of interest groups on rent dissipation. In cases where individuals ignore the effect of the lobbying activities on the rent size, the number of groups is negatively related to rent dissipation and there exists an inverse relation between the extent of egalitarianism of within-group rent sharing rules and the total rent dissipation in the symmetric setting. Model two examines the case where each individual in each group takes into account the effect of lobbying activities on the total “pie”, of which she/he competes for a share through within-group and between-group interaction. The relation between the number of symmetric groups and the total rent dissipation is shown to be an inverted “U”-shape, contrary to the conventional wisdom that holds a monotonous relation between the two variables.     

Reform of the United Nations Security Council: equity and efficiency

Rents and political motives are present in many aspects of public policy. This article considers the role of rents, rent seeking, and the political choice of environmental policy. Rents are introduced into the political choice of price and quantity regulation under conditions of uncertainty. The model shows how political-economy aspects affect the choice between price and quantity regulation. The contesting of rents associated with different policies affects the regulatory structure and influences the political choice of an environmental policy target. The primary conclusion is that the political choice of environmental policy depends on the interaction between the efficiency of rent transfer and the size of rent-seeking groups within the economy.     

Constitutional Prohibitions in a Rent Seeking Model

I extend the standard rent seeking model to allow lobbying fora constitutional prohibition on wealth transfers. I examinetwo issues: (1) the ability of special interests withsignificant political capacity to block constitutional change;and (2) the effect of adding a constitutional stage on totallobbying expenditures. Defeating a prohibition on wealthtransfers is a public good for rent seekers; success inconstitutional politics merely allows them to lobby for wealthtransfers. The resulting collective action problem for rentseekers in constitutional politics offsets the generalinterest's free rider problems, reducing the probability oftransfers and expected total lobbying expenditures compared tothe traditional rent seeking contest. Introduction of aconstitutional stage also reverses several comparative staticsresults from the rent seeking game. An increase in the numberof rent seekers or the general interest's (consumers') abilityto organize increase lobbying in the rent seeking game butgenerally reduce expected lobbying in the constitutionalprohibition game.     

Rent dissipation and efficiency in a contest with asymmetric valuations

This paper introduces contest efficiency as an alternative to rent dissipation when measuring efficiency in a contest with asymmetric valuations. Contest efficiency is defined as the expected proportion of the maximum obtainable benefit captured by the contest, and differs from rent dissipation because it values the expected winner of the contest. Therefore, rent dissipation and contest efficiency may suggest contradictory conclusions when agents have asymmetric valuations. This result is illustrated when comparing alternative equilibria in contests with asymmetric reimbursement and when analyzing the comparative static effect of a change in the relative benefit of two agents in a Cournot-Nash contest.     

X-efficiency,rent-seeking and social costs

This paper investigates shifts in cost functions of monopoly and regulated firms operating under conditions of X-inefficiency and rent-seeking behavior. We show that X-inefficiency and rent seeking have significantly different implications for economic welfare. Distinctions are drawn between pecuniary and real X-inefficiency and between sunk and continuing rent-seeking costs. In general, for a given cost shift rent-seeking behavior implies larger social costs than does X-inefficiency theory. However, cost shifts caused by either X-inefficiency or rent seeking are observationally equivalent. This implies empirically measured cost shifts cannot unambiguously be attributed to either cause.     

Democracy and socialism

This paper shows that Marx's theory of agricultural rent is not an adjunct to his theory of capital at the level of distribution but is inseparably developed from it. The forms of differential and absolute rent are shown to correspond to the formation of market value and price of production in the agricultural sector respectively, these in turn depending upon the barriers posed by landed property to intensive and extensive cultivation. In appendices, Marx' critique of Ricardo's theory of rent, differential rent on the worst land, a critique of other interpretations of Marx, and the ‘historical transformation problem’ are each considered briefly.     

The Olson ratio and indirectly endogenous rent

Public Choice - We consider an economy where the rent value depends indirectly on value-adding investment of agents (thus indirectly endogenous) and the win-probability is a function of rent...     

Which Rectangle?: An Extension

This note examines the social cost of rent seeking when firmsseek rent by obtaining government subsidies as well as bysecuring a monopoly position. The social cost of rent seekingproves to be represented by the new Tullock rectangle.     

Do Small Area Fair Market Rents Reduce Racial Disparities in the Voucher Program?

ABSTRACT

A lawsuit that argued that the method used to calculate rent limits in the Housing Choice Voucher Program promoted racial segregation in Dallas, Texas, resulted in the U.S. Department of Housing and Urban Development developing zip code-based voucher rent limits in Dallas in 2011. This rent calculation approach was then expanded to five other demonstration sites in 2012. This article analyzes whether adjusting voucher rent limits reduces a minority household’s likelihood of living in a high-minority neighborhood, improves their likelihood of living in a higher opportunity neighborhood, and reduces the disparity in location outcomes between minority and White households in the voucher program. This article finds evidence of improvements in the location outcomes of Black and Hispanic voucher households because of the use of zip code-based rent limits, but that these results are only marginal with respect to the persistent disparities in outcomes based on race within the voucher program.     

The thrill of victory,the agony of defeat

This paper presents experimental evidence from a rent-seeking exercise where the highest bidder wins the rent, but all bidders, including the winner, lose their wagers. This exercise closely resembles the rent-seeking dilemma facing agents in many settings. There are two main conclusions from the results. First, there is a tendency towards overdissipation of the rent. Second, some individuals are willing to pay more for a rent than its face-value would warrant. We attribute this phenomenon to a “thrill of victory” effect.     

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.     

Rents from in-kind subsidy: “Charity” in the public sector

Public choice analysis usually focuses attention on the behaviour of self-interested individuals but this paper considers rent seeking when some taxpayers are motivated by altruism. Redistribution policies initiated by self-interested rent seekers require taxpayer approval. Even if taxpayers are fully informed, their resistance to inefficient schemes is reduced when public sector schemes are the only means available to pursue altruistic goals. Altruism serves to broaden the scope within which rent seekers may operate. A discussion of international “tied” aid illustrates the impact which rent seeking can exert on public sector “charity.”