On Adverse Selection of Technologies
AbstractThis paper discusses the interrelation between the choice of technology and rent seeking. First, the players have to decide on the purchase of a technology. If the technology is acquired, realized profits are distributed via a rent-seeking contest. I can show that players will reject profitable technologies ("adverse selection") or underinvest, if they anticipate excessive rent seeking. The results are applied to the empirical findings on differences in income and total factor productivity across countries. These findings can be explained if developing countries are more prone to rent seeking than industrial ones due to their less stable property-rights structures.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 164 (2008)
Issue (Month): 2 (June)
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Web page: http://www.mohr.de/jite
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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- Beckmann, Michael & Kräkel, Matthias, 2012.
"Internal rent seeking, works councils, and optimal establishment size,"
European Economic Review,
Elsevier, vol. 56(4), pages 711-726.
- Michael Beckmann & Matthias Kräkel, 2011. "Internal Rent Seeking, Works Councils, and Optimal Establishment Size," Working papers 2011/14, Faculty of Business and Economics - University of Basel.
- Dominique Demougin & Anja Schöttner, 2010. "Technology adoption under hidden information," Journal of Economics, Springer, vol. 100(1), pages 1-18, May.
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