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Where are the rent seekers?

Author

Listed:
  • Arye L. Hillman

    (Bar-Ilan University
    CESifo)

  • Heinrich W. Ursprung

    (University of Konstanz
    CESifo)

Abstract

In a remarkably simple and yet one of the most original and insightful observations of 20th century economics, Gordon Tullock pointed out that there are efficiency losses when public policies and political behavior create contestable rents. Tullock also observed that social losses from contesting rents appeared smaller than might be expected, so raising the question ‘where are the rent seekers?’ Tullock proposed that political accountability and ‘free-riding’ incentives in interest groups limit social losses from rent seeking. We affirm Tullock’s explanations, which apply differently under different political institutions. We compare Tullock with Gary Becker, who focused on deadweight losses from redistribution and concluded, in contrast to Tullock, that political redistribution is efficient. The comparison with Becker highlights the significance of the recognition of Tullock’s concept of rent seeking. By excluding rent-seeking losses from the social costs of redistribution, Becker could arrive at a conclusion more favorable than Tullock to an ideology that sees merit in extensive redistribution. Tullock’s model, although more encompassing of actual social costs of redistribution, would have been less welcome in the social democratic welfare state.

Suggested Citation

  • Arye L. Hillman & Heinrich W. Ursprung, 2016. "Where are the rent seekers?," Constitutional Political Economy, Springer, vol. 27(2), pages 124-141, June.
  • Handle: RePEc:kap:copoec:v:27:y:2016:i:2:d:10.1007_s10602-016-9211-0
    DOI: 10.1007/s10602-016-9211-0
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    Cited by:

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    2. Arye L. Hillman & Heinrich W. Ursprung, 2016. "Academic exclusion: some experiences," Public Choice, Springer, vol. 167(1), pages 1-20, April.
    3. Arye L. Hillman, 2021. "Heinrich Ursprung: a scholarly life," Public Choice, Springer, vol. 189(3), pages 305-312, December.
    4. Björn Kauder & Manuela Krause & Niklas Potrafke, 2018. "Electoral cycles in MPs’ salaries: evidence from the German states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 981-1000, August.
    5. Giorgio Bellettini & Paolo Roberti, 2020. "Politicians’ coherence and government debt," Public Choice, Springer, vol. 182(1), pages 73-91, January.
    6. Patrick A. McLaughlin & Adam C. Smith & Russell S. Sobel, 2019. "Bootleggers, Baptists, and the risks of rent seeking," Constitutional Political Economy, Springer, vol. 30(2), pages 211-234, June.
    7. Escalante, Edwar E., 2020. "Night watchers and terrorists," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 116-131.
    8. Sami Fethi & Hatice Imamoglu, 2021. "The impact of rent‐seeking on economic growth in the six geographic regions: Evidence from static and dynamic panel data analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5349-5362, October.
    9. Toke S. Aidt, 2016. "Rent seeking and the economics of corruption," Constitutional Political Economy, Springer, vol. 27(2), pages 142-157, June.
    10. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.
    11. Wilfred J. Ethier & Arye L. Hillman, 2017. "The Politics of International Trade," CESifo Working Paper Series 6456, CESifo.
    12. Leppälä, Samuli, 2021. "A partially exclusive rent-seeking contest," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 60-75.
    13. Leppälä, Samuli, 2018. "Partial Exclusivity Can Resolve The Empirical Puzzles Associated With Rent-Seeking Activities," Cardiff Economics Working Papers E2018/25, Cardiff University, Cardiff Business School, Economics Section.
    14. Schnellenbach, Jan, 2021. "The concept of Ordnungspolitik: Rule-based economic policy-making from the perspective of the Freiburg School," Freiburg Discussion Papers on Constitutional Economics 21/07, Walter Eucken Institut e.V..

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    More about this item

    Keywords

    Rent seeking; Rent creation; Income distribution; Interest groups; Contest models; Gordon Tullock; Gary Becker;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • P - Economic Systems

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