Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_5833.html
   My bibliography  Save this paper

Where are the Rent Seekers?

Author

Listed:
  • Arye L. Hillman
  • Heinrich Ursprung
Abstract
In a remarkably simple and yet in one of the most original and insightful observations of 20th century economics, Gordon Tullock observed that there are efficiency losses when public policies and political behavior create contestable rents. Tullock also observed that social losses from contesting rents appeared smaller than might be expected. The question is then raised ‘where are the rent seekers?’ Tullock proposed that rent seeking was restrained by political accountability and ‘free-riding’ incentives in interest groups. We affirm Tullock’s explanations, which can be extended to locate rent seekers under different political institutions. We compare Tullock with Gary Becker, who focused on deadweight losses from redistribution and concluded, in contrast to Tullock, that political redistribution is efficient. The comparison highlights the significance of the recognition of rent seeking. By excluding rent-seeking losses from the social costs of redistribution, Becker could arrive at a conclusion more favorable than Tullock to an ideology that sees merit in extensive redistribution.

Suggested Citation

  • Arye L. Hillman & Heinrich Ursprung, 2016. "Where are the Rent Seekers?," CESifo Working Paper Series 5833, CESifo.
    • Handle: RePEc:ces:ceswps:_5833
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp5833.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Heinrich W. Ursprung, 2008. "Public Goods, Rent Dissipation, And Candidate Competition," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 329-346, Springer.
    2. Gil S. Epstein & Arye L. Hillman & Heinrich W. Ursprung, 1999. "The King Never Emigrates," Review of Development Economics, Wiley Blackwell, vol. 3(2), pages 107-121, June.
    3. Rowley, Charles K., 2000. "Political culture and economic performance in sub-Saharan Africa," European Journal of Political Economy, Elsevier, vol. 16(1), pages 133-158, March.
    4. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
    5. Hillman, Arye L. & Metsuyanim, Kfir & Potrafke, Niklas, 2015. "Democracy with group identity," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 274-287.
    6. S. C. Littlechild, 2008. "Misleading Calculations of The Social Costs of Monopoly Power," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 89-104, Springer.
    7. Hillman, Arye L & Katz, Eliakim, 1984. "Risk-Averse Rent Seekers and the Social Cost of Monopoly Power," Economic Journal, Royal Economic Society, vol. 94(373), pages 104-110, March.
    8. Arye L. Hillman & Heinrich W. Ursprung, 2000. "Political culture and economic decline," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 219-243, Springer.
    9. Wilfred J. Ethier & Arye L. Hillman (ed.), 2008. "The WTO and the Political Economy of Trade Policy," Books, Edward Elgar Publishing, number 3717.
    10. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-1187, December.
    11. Donald Wittman, 2009. "How Pressure Groups Activate Voters and Move Candidates Closer to the Median," Economic Journal, Royal Economic Society, vol. 119(540), pages 1324-1343, October.
    12. Kauder, Björn & Potrafke, Niklas, 2015. "Just hire your spouse! Evidence from a political scandal in Bavaria," European Journal of Political Economy, Elsevier, vol. 38(C), pages 42-54.
    13. repec:elg:eechap:15325_19 is not listed on IDEAS
    14. Shmuel Nitzan, 2008. "Collective Rent Dissipation," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 309-321, Springer.
    15. repec:elg:eechap:15325_4 is not listed on IDEAS
    16. Van Long, Ngo, 2013. "The theory of contests: A unified model and review of the literature," European Journal of Political Economy, Elsevier, vol. 32(C), pages 161-181.
    17. Congleton, Roger D., 1989. "Efficient status seeking: Externalities, and the evolution of status games," Journal of Economic Behavior & Organization, Elsevier, vol. 11(2), pages 175-190, March.
    18. repec:elg:eechap:15325_26 is not listed on IDEAS
    19. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, October.
    20. Roger D. Congleton, 1986. "Rent-seeking aspects of political advertising," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 297-311, Springer.
    21. Arye L. Hillman & Heinrich W. Ursprung, 2008. "Domestic Politics, Foreign Interests, and International Trade Policy," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 113-129, Springer.
    22. Tullio Jappelli, 2010. "Economic Literacy: An International Comparison," Economic Journal, Royal Economic Society, vol. 120(548), pages 429-451, November.
    23. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    24. Donald Wittman, 2009. "How Pressure Groups Activate Voters and Move Candidates Closer to the Median," Economic Journal, Royal Economic Society, vol. 119(540), pages 1324-1343, October.
    25. Congleton, Roger D., 1984. "Committees and rent-seeking effort," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 197-209, November.
    26. Kahana, Nava & Klunover, Doron, 2014. "Rent seeking and the excess burden of taxation," European Journal of Political Economy, Elsevier, vol. 35(C), pages 158-167.
    27. Park, Hyun & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2005. "Choosing the size of the public sector under rent seeking from state coffers," European Journal of Political Economy, Elsevier, vol. 21(4), pages 830-850, December.
    28. Hillman, Arye L. & Schnytzer, Adi, 1986. "Illegal economic activities and purges in a Soviet-type economy: A rent-seeking perspective," International Review of Law and Economics, Elsevier, vol. 6(1), pages 87-99, June.
    29. repec:bla:rdevec:v:3:y:1999:i:2:p:107-21 is not listed on IDEAS
    30. Heinrich Ursprung, 2012. "The evolution of sharing rules in rent seeking contests: Incentives crowd out cooperation," Public Choice, Springer, vol. 153(1), pages 149-161, October.
    31. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    32. Anderson, Gary M & Boettke, Peter J, 1997. "Soviet Venality: A Rent-Seeking Model of the Communist State," Public Choice, Springer, vol. 93(1-2), pages 37-53, October.
    33. repec:elg:eechap:15325_20 is not listed on IDEAS
    34. Sharif Mohammad & John Whalley, 1984. "Rent Seeking in India: Its Costs and Policy Significance," Kyklos, Wiley Blackwell, vol. 37(3), pages 387-413, August.
    35. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.
    36. Raphael Becker & Arye Hillman & Niklas Potrafke & Alexander Schwemmer, 2015. "The preoccupation of the United Nations with Israel: Evidence and theory," The Review of International Organizations, Springer, vol. 10(4), pages 413-437, December.
    37. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    38. Posner, Richard A, 1975. "The Social Costs of Monopoly and Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 807-827, August.
    39. Björn Kauder & Niklas Potrafke, 2016. "Supermajorities and Political Rent Extraction," Kyklos, Wiley Blackwell, vol. 69(1), pages 65-81, February.
    40. Becker, Gary S., 1985. "Public policies, pressure groups, and dead weight costs," Journal of Public Economics, Elsevier, vol. 28(3), pages 329-347, December.
    41. Aidt, Toke Skovsgaard, 2003. "Redistribution and deadweight cost: the role of political competition," European Journal of Political Economy, Elsevier, vol. 19(2), pages 205-226, June.
    42. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    43. Ignacio Del Rosal, 2011. "The Empirical Measurement Of Rent‐Seeking Costs," Journal of Economic Surveys, Wiley Blackwell, vol. 25(2), pages 298-325, April.
    44. Manfred J. Holler & Bengt-Arne Wickstr÷m, 1999. "The Use of Scandals in the Progress of Society," Homo Oeconomicus, Institute of SocioEconomics, vol. 16, pages 97-110.
    45. Hillman, Arye L. & Katz, Eliakim, 1987. "Hierarchical structure and the social costs of bribes and transfers," Journal of Public Economics, Elsevier, vol. 34(2), pages 129-142, November.
    46. repec:elg:eechap:15325_21 is not listed on IDEAS
    47. Hillman, Arye L., 1984. "Preemptive rent seeking and the social cost of monopoly power," International Journal of Industrial Organization, Elsevier, vol. 2(3), pages 277-281, September.
    48. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
    49. Levin, Mark & Satarov, Georgy, 2000. "Corruption and institutions in Russia," European Journal of Political Economy, Elsevier, vol. 16(1), pages 113-132, March.
    50. Cowling, Keith & Mueller, Dennis C, 1978. "The Social Costs of Monopoly Power," Economic Journal, Royal Economic Society, vol. 88(352), pages 727-748, December.
    51. Hillman,Arye L., 2009. "Public Finance and Public Policy," Cambridge Books, Cambridge University Press, number 9780521494267, April.
    52. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    53. Eliakim Katz & Jacob Rosenberg, 1989. "Rent-seeking for budgetary allocation: Preliminary results for 20 countries," Public Choice, Springer, vol. 60(2), pages 133-144, February.
    54. Kahana, Nava & Klunover, Doron, 2014. "Rent Seeking and the Excess Burden of Taxation," IZA Discussion Papers 8160, Institute of Labor Economics (IZA).
    55. N/A, 2013. "The UK economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 225(1), pages 3-3, August.
    56. Aidt, Toke S. & Hillman, Arye L., 2008. "Enduring rents," European Journal of Political Economy, Elsevier, vol. 24(3), pages 545-553, September.
    57. repec:elg:eechap:15325_23 is not listed on IDEAS
    58. Roger D. Congleton & Arye L. Hillman (ed.), 2015. "Companion to the Political Economy of Rent Seeking," Books, Edward Elgar Publishing, number 15325.
    59. Hillman,Arye L., 2009. "Public Finance and Public Policy," Cambridge Books, Cambridge University Press, number 9780521738057, April.
    60. Gordon Tullock, 1959. "Problems of Majority Voting," Journal of Political Economy, University of Chicago Press, vol. 67(6), pages 571-571.
    61. Davis, Douglas D & Reilly, Robert J, 1999. "Rent-Seeking with Non-identical Sharing Rules: An Equilibrium Rescued," Public Choice, Springer, vol. 100(1-2), pages 31-38, July.
    62. repec:elg:eechap:15325_2 is not listed on IDEAS
    63. Roger Congleton, 2004. "The Political Economy of Gordon Tullock," Public Choice, Springer, vol. 121(1), pages 213-238, October.
    64. Falkinger, Josef, 1999. "Social instability and redistribution of income," European Journal of Political Economy, Elsevier, vol. 15(1), pages 35-51, March.
    65. repec:elg:eechap:15325_11 is not listed on IDEAS
    66. Hillman, Arye L., 2010. "Expressive behavior in economics and politics," European Journal of Political Economy, Elsevier, vol. 26(4), pages 403-418, December.
    67. Cassing, James H & Hillman, Arye L, 1986. "Shifting Comparative Advantage and Senescent Industry Collapse," American Economic Review, American Economic Association, vol. 76(3), pages 516-523, June.
    68. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    69. Toke S. Aidt & Jayasri Dutta, 2008. "Policy Compromises: Corruption And Regulation In A Democracy," Economics and Politics, Wiley Blackwell, vol. 20(3), pages 335-360, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ferris, J. Stephen & Voia, Marcel-Cristian, 2023. "Do rival political parties enforce government efficiency? Evidence from Canada 1867–2021," European Journal of Political Economy, Elsevier, vol. 77(C).
    2. Wilfred J. Ethier & Arye L. Hillman, 2017. "The Politics of International Trade," CESifo Working Paper Series 6456, CESifo.
    3. Gründler, Klaus & Hillman, Arye L., 2021. "Ambiguous protection," European Journal of Political Economy, Elsevier, vol. 68(C).
    4. Björn Kauder & Manuela Krause & Niklas Potrafke, 2018. "Electoral cycles in MPs’ salaries: evidence from the German states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 981-1000, August.
    5. Leppälä, Samuli, 2021. "A partially exclusive rent-seeking contest," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 60-75.
    6. Sami Fethi & Hatice Imamoglu, 2021. "The impact of rent‐seeking on economic growth in the six geographic regions: Evidence from static and dynamic panel data analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5349-5362, October.
    7. Lepp l , Samuli, 2018. "Partial Exclusivity Can Resolve The Empirical Puzzles Associated With Rent-Seeking Activities," Cardiff Economics Working Papers E2018/25, Cardiff University, Cardiff Business School, Economics Section.
    8. Stephen FERRIS & Marcel-Cristian VOIA, 2022. "Do Rival Political Parties Enforce Government Efficiency? Evidence from Canada, 1867 - 2021," LEO Working Papers / DR LEO 2948, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    9. Arye L. Hillman & Heinrich W. Ursprung, 2016. "Academic exclusion: some experiences," Public Choice, Springer, vol. 167(1), pages 1-20, April.
    10. Schnellenbach, Jan, 2021. "The concept of Ordnungspolitik: Rule-based economic policy-making from the perspective of the Freiburg School," Freiburg Discussion Papers on Constitutional Economics 21/7, Walter Eucken Institut e.V..
    11. Giorgio Bellettini & Paolo Roberti, 2020. "Politicians’ coherence and government debt," Public Choice, Springer, vol. 182(1), pages 73-91, January.
    12. Patrick A. McLaughlin & Adam C. Smith & Russell S. Sobel, 2019. "Bootleggers, Baptists, and the risks of rent seeking," Constitutional Political Economy, Springer, vol. 30(2), pages 211-234, June.
    13. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    14. Arye L. Hillman, 2021. "Heinrich Ursprung: a scholarly life," Public Choice, Springer, vol. 189(3), pages 305-312, December.
    15. Escalante, Edwar E., 2020. "Night watchers and terrorists," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 116-131.
    16. Peter K. Hazlett & Chandler S. Reilly, 2023. "Bureaucratic rent creation: the case of price discrimination in the market for postsecondary education," Constitutional Political Economy, Springer, vol. 34(2), pages 226-256, June.
    17. Zhihao Yu, 2022. "Why Are Tobacco and Alcohol Control Policies So Different?–A Political-Economy Explanation," Carleton Economic Papers 22-05, Carleton University, Department of Economics.
    18. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arye L. Hillman & Ngo Van Long, 2017. "Rent Seeking: The Social Cost of Contestable Benefits," CESifo Working Paper Series 6462, CESifo.
    2. Arye Hillman & Ngo Van Long, 2017. "The social cost of contestable benefits," CIRANO Working Papers 2017s-11, CIRANO.
    3. Arye L. Hillman & Heinrich W. Ursprung, 2016. "Academic exclusion: some experiences," Public Choice, Springer, vol. 167(1), pages 1-20, April.
    4. Hillman, Arye L. & Metsuyanim, Kfir & Potrafke, Niklas, 2015. "Democracy with group identity," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 274-287.
    5. Kahana, Nava & Klunover, Doron, 2014. "Rent Seeking and the Excess Burden of Taxation," IZA Discussion Papers 8160, Institute of Labor Economics (IZA).
    6. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    7. Gründler, Klaus & Hillman, Arye L., 2021. "Ambiguous protection," European Journal of Political Economy, Elsevier, vol. 68(C).
    8. Patrick A. McLaughlin & Adam C. Smith & Russell S. Sobel, 2019. "Bootleggers, Baptists, and the risks of rent seeking," Constitutional Political Economy, Springer, vol. 30(2), pages 211-234, June.
    9. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.
    10. repec:elg:eechap:15325_2 is not listed on IDEAS
    11. Wilfred J. Ethier & Arye L. Hillman, 2017. "The Politics of International Trade," CESifo Working Paper Series 6456, CESifo.
    12. Levy, Daniel & Snir, Avichai, 2022. "Potterian Economics," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 1, pages 1-32.
    13. Van Long, Ngo, 2013. "The theory of contests: A unified model and review of the literature," European Journal of Political Economy, Elsevier, vol. 32(C), pages 161-181.
    14. Alice Guerra & Barbara Luppi & Francesco Parisi, 2019. "Productive and unproductive competition: a unified framework," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 785-804, October.
    15. repec:elg:eechap:15325_13 is not listed on IDEAS
    16. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.
    17. Alcalde, José & Dahm, Matthias, 2010. "Rent seeking and rent dissipation: A neutrality result," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 1-7, February.
    18. Congleton, Roger D. & Lee, Sanghack, 2009. "Efficient mercantilism? Revenue-maximizing monopoly policies as Ramsey taxation," European Journal of Political Economy, Elsevier, vol. 25(1), pages 102-114, March.
    19. Aidt, Toke S. & Hillman, Arye L. & Qijun, LIU, 2020. "Who takes bribes and how much? Evidence from the China Corruption Conviction Databank," World Development, Elsevier, vol. 133(C).
    20. Pierre Fauvet & Sébastien Rouillon, 2016. "Would you trust lobbies?," Public Choice, Springer, vol. 167(3), pages 201-219, June.
    21. Hanley Nick & MacKenzie Ian A, 2010. "The Effects of Rent Seeking over Tradable Pollution Permits," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-26, July.
    22. Arye L. Hillman & John G. Riley, 1989. "Politically Contestable Rents And Transfers," Economics and Politics, Wiley Blackwell, vol. 1(1), pages 17-39, March.

    More about this item

    Keywords

    rent seeking; rent creation; deadweight losses; income distribution; interest groups; contest models; Gordon Tullock; Gary Becker; Donald Wittman;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_5833. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.