The consequences of economic growth

Book reviewed in this article: Growth: The Price We Pay. By E. J. MISHAN. Cost-Benefit Analysis. By E. J. MISHAN. The Limits to Growth. By DONELLA H. MEADOWS, DENNIS L. MADOWS, JØRGEN RANDERS, and WILLIAM w. BEHRENS m.     

Book Review

Book reviewed in this article: The British General Election of 1997 by David Butler and Dennis Kavanagh. New Labour Triumphs: Britain at the Polls by Anthony King et al. Chatham     

Ambiguous political power and contest efforts

When there is incomplete information on the source of power in a contest, the contestants may divide their lobbying efforts between the potential centers of power, only one of which determines the contests’ winning probabilities. Our analysis focuses on the effect of ambiguity regarding the source of power on the contestants’ aggregate effort in a symmetric, simple lottery contest with two potential centers of power. Specifically, we examine the effects of varying the informativeness of the contestants’ private signals (i.e., the probability that a signal is correct) and the degree of correlation between them. Our benchmark case is the standard Tullock’s model, in which the source of power is known, i.e., the contestants’ signals are perfectly informative. We show that the level of aggregate effort in this case is reached also when the signals are perfectly uninformative. However, in any intermediate case the contestants’ aggregate effort is lower, provided that the signals are not perfectly correlated. In other words, there is a U-shape relationship between the informativeness of the signals and the aggregate effort in the contest. The lowest level of effort is spent when the signals are independent and the probability that a signal is true is about 0.85. In this case, efforts are reduced by about one-fifth in comparison with the benchmark case: from a rent dissipation of 50% to slightly over 40%.     

Stakes and Welfare in Rent-Seeking Contests

Using a public-policy application ofTullock's two-player rent-seeking contest,this paper focuses on the relationshipbetween the aggregate expected utility ofthe players and their asymmetricvaluations. In our game these valuationsare the players' payoffs in the twopossible states of nature, namely, theapproval and rejection of the proposedpublic policy. Our main result provides thecondition that ensures that the aggregateexpected payoff of the two contestants (theinterest groups that compete on theapproval of the proposed policy) is positively related to the valuationparameters.     

Living dangerously: a defense of Mortal Peril

As one of the most controversial writers of our time, just the name Richard Epstein draws immediate attention from all sectors of academia. But if the hallmark of great ideas is the criticism they engender, Professor Epstein's words and thoughts are powerful indeed. In Mortal Peril, Professor Epstein outlined a fundamental shift in thinking that he claimed needed to occur before any discussion of health care could take place. The final consensus of the validity of Professor Epstein's views may still be a matter for history to judge, but in many ways, he has already won; with the strength of his logic and convictions, he has forced other scholars to address his concerns, and in doing so, he has refocused the debate on health care. At the symposium, Professor Epstein proved his indisputable eloquence and debating skill in answering and refuting the various points made by his many critics. Now, in writing, he thoughtfully considers and analyzes the views submitted by his colleagues, and solidifies the ideas that first found their expression in Mortal Peril.     

Lobbying and Concessions: Comparing Nash to Stackelberg Games

We analyze how the standardresults in lobbying theory change when one side has asecond instrument at its disposal. We look at theeffect concessions by one side have on the outcome ina Nash and a Stackelberg game.     

Efforts in two-sided contests

The degree of rent dissipation is studied in extended two-sided contests that involve two types of efforts. While usual contestants expend resources in trying to win the contested prize, potential recipients of the rent-seeking efforts also participate in the contest. This is due to uncertainty regarding the source of power in the contest that induces the bureaucrats to expend resources to increase their share in the rent-seeking efforts by trying to appear as the party controlling the allocation of the prize. We show that the existing theoretical and empirical studies are incomplete and may underestimate the extent of rent dissipation.