The Welfare Effects of Rent-Saving and Rent-Seeking
AbstractThis paper uses an overlapping-generations framework to model the allocation of import licences of intermediate goods according to firm capacity. It shows that this method of allocation encourages rent-seeking and also thereby improves welfare compared with a method that does not allow rent-seeking. A. O. Kreuger (1975, 1974) and J. N. Bhagwati and P. Desai (1970) describe how Turkey and India have allocated imports on the basis of firm capacity, which led to rent-seeking through overexpansion of capacity. J. N. Bhagwati and T. N. Srinivasan (1980) first recognized the possibility that rent-seeking may actually improve welfare in the presence of a distortion, as it does in this paper.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 26 (1993)
Issue (Month): 3 (August)
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- Ma, Tay-Cheng, 2008. "Disadvantageous collusion and government regulation," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 168-185, January.
- Arijit Mukherjee, 2002. "Advantageous or Disadvantageous Semi-collusion Licensing in a Vertically Separated Industry," Industrial Organization 0211006, EconWPA.
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