Rent Seeking, Technology Commitment, and Economic Development
Real-world rent seeking has been a puzzle to political economists, as they cannot observe as much direct social cost as commonly believed. In this paper, we identify socially inefficient technology commitment as a device for rent seekers to improve their positions in a zero-dissipation contest. We show that the domestic industry may forgo innovation opportunities which would be optimal decisions without rent-seeking uncertainty. This analysis also explains some conspicuous features of the farm subsidy programs in the US. We conclude by discussing rent-seeking's dynamic implication: the retarding of economic development.
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Volume (Year): 154 (1998)
Issue (Month): 4 (December)
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