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The Political Economy Of Quota Rents In A Dynamic International Trade Model

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  • Shannon K. Mitchell

Abstract

This paper considers the implications of allowing quota rents to become capitalized. Capitalized quota rents crowd out physical capital in savers’portfolios, reducing the capital stock. Capitalization of quota rents also makes removal of the quota politically more difficult, since those currently alive may not be able to fully compensate the losers before the losers die. I use an overlapping generations model to provide examples which illustrate the difficulty of removing a quota once its rents have been fully capitalized. This work has implications for any policy which could lead to capitalized rents.

Suggested Citation

  • Shannon K. Mitchell, 1995. "The Political Economy Of Quota Rents In A Dynamic International Trade Model," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 243-261, November.
  • Handle: RePEc:bla:ecopol:v:7:y:1995:i:3:p:243-261
    DOI: 10.1111/j.1468-0343.1995.tb00113.x
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