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On The Allocative Effects of Rent Seeking

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  • Luis C. Corchón

Abstract

We consider the effects of rent‐seeking activities on resource allocation. Before rent‐seeking activities take place, there are prior probabilities that an object will be given to one of several agents. The posterior probability depends on prior probabilities and the expenses incurred by all agents. In the case of two agents who equally value the object, prior and posterior probabilities coincide, and thus rent seeking has no effect on resource allocation. If there are two agents with different valuations of the object or we have more than two agents, rent seeking matters and posterior probabilities reflect the valuations of the agents.

Suggested Citation

  • Luis C. Corchón, 2000. "On The Allocative Effects of Rent Seeking," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(4), pages 483-491, October.
    • Handle: RePEc:bla:jpbect:v:2:y:2000:i:4:p:483-491
    DOI: 10.1111/1097-3923.00047
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    Cited by:

    1. Birendra Rai & Rajiv Sarin, 2009. "Generalized contest success functions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(1), pages 139-149, July.
    2. XiaoGang Che & Brad Humphreys, 2014. "Contests with a Prize Externality and Stochastic Entry," Working Papers 14-19, Department of Economics, West Virginia University.
    3. Eggert, Wolfgang & Itaya, Jun-ichi & Mino, Kazuo, 2011. "A dynamic model of conflict and appropriation," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 167-182, April.
    4. Satya R. Chakravarty & Bhargav Maharaj, 2014. "New contest success functions," Working Papers 340, ECINEQ, Society for the Study of Economic Inequality.
    5. Birendra K. Rai & Rajiv Sarin, 2007. "Parametric Contest Success Functions," Jena Economics Research Papers 2007-010, Friedrich-Schiller-University Jena.
    6. Stephen Dobson & John Goddard & Frank Stahler, 2008. "Effort levels in contests: an empirical application of the Tullock model," NBS Discussion Papers in Economics 2008/9, Economics, Nottingham Business School, Nottingham Trent University.
    7. Ravi Radhakrishnan, 2022. "Public expenditure allocation, lobbying, and growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 756-780, August.

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