A theory of rent seeking with informational foundations
AbstractI develop a model of rent seeking with informational foundations and an arbitrary number of rent seekers, and I compare the results with Tullock's (1980) classic model where the influence activities are "black-boxed." Given the microfoundations, the welfare consequences of rent seeking can be studied. In particular, I show that competition among rent seekers can be socially beneficial, since the additional information that the decision maker gets access to makes the increase in rent-seeking expenditures worthwhile. However, the analysis also highlights a logic that, under natural parameter assumptions, makes the rent seekers spend more resources on rent seeking than is in society's interest, which is consistent with the spirit of the rent-seeking literature.
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Bibliographic InfoArticle provided by Springer in its journal Economics of Governance.
Volume (Year): 8 (2007)
Issue (Month): 3 (May)
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Web page: http://link.springer.de/link/service/journals/10101/index.htm
Other versions of this item:
- Johan N.M. Lagerlöf, 2006. "A Theory of Rent Seeking with Informational Foundations," Royal Holloway, University of London: Discussion Papers in Economics 06/04, Department of Economics, Royal Holloway University of London, revised Sep 2006.
- Lagerlöf, Johan N.M., 2006. "A Theory of Rent Seeking with Informational Foundations," CEPR Discussion Papers 5893, C.E.P.R. Discussion Papers.
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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