AbstractRent seeking is often studied with reference to a contemporaneous rent evaluated at a point in time. We study the social cost of rent seeking when rents endure over time, but may have to be re-contested because of imperfect rent protection, or may disappear because of deregulation. The present value of a contested rent measures the social cost of rent seeking, irrespective of imperfect rent protection and the prospect of deregulation. Rent seeking is discouraged by the inability of governments to commit to protect rents and by their inability to commit to rentgenerating regulations and policies. Moreover, lasting deregulation can preempt a substantial fraction of the potential rent seeking cost.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0802.
Date of creation: Jan 2008
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Rent seeking; contests; rent dissipation; deregulation; liberalization; commitment.;
Other versions of this item:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-13 (All new papers)
- NEP-CDM-2008-06-13 (Collective Decision-Making)
- NEP-REG-2008-06-13 (Regulation)
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