Forms of governance and the size of rent-seeking
AbstractIn this paper we present a model of an organization where agents can choose between productive and rent-seeking activities. We consider two governance institutions, single ownership and corporate governance or parliament rule. Applications include models of internal organization of a firm, of a kingdom ruled either by an absolute monarch or by the parliament, and location where agents can locate either in the court and become rent-seekers, or in an industrial city and become entrepreneurs. Our main goal is to study the size of rent-seeking activities under the two governance regimes. Under single ownership, rent-seeking reflects the taste of the owner for such activities and the possibilities of extracting rents from productive agents (who finance rent-seeking). The main conclusion of the paper is that, under corporate governance, the size of the rent-seeking sector may be larger than under single ownership despite the fact that in the former nobody has an intrinsic taste for rent-seeking activities.
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Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 30 (2008)
Issue (Month): 2 (February)
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Web page: http://link.springer.de/link/service/journals/00355/index.htm
Other versions of this item:
- Corchón, Luis C., . "Forms of governance and the size of rent-seeking," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/312, Universidad Carlos III de Madrid.
- Luis C. Corchon, 2004. "Forms Of Governance And The Size Of Rent-Seeking," Economics Working Papers we041905, Universidad Carlos III, Departamento de Economía.
- Corchón, Luis C., . "Forms of governance and the size of rent-seeking," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/3809, Universidad Carlos III de Madrid.
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