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On Rent-Seeking Cost Under Democracy And Under Dictatorship

This note argues that, broadly speaking, democracies have a comparative advantage over dictatorships in keeping rent-seeking costs down by imposing penalties that reduce returns to scale in rent-seeking. Dictatorships have a comparative advantage in restricting the number of rent-seekers through higher entry barriers into rent-seeking, although not to the point of eliminating rent-seeking altogether. Of the two, the former is potentially a more effective way to control rent-seeking costs. For this reason, a democracy has the potential to achieve lower rent-seeking losses, as a share of total rent available, than does a dictatorship, although this may require the democracy to achieve a high degree of transparency of government, along with freedom of the press, the judiciary, and public and private watchdog agencies to criticize politicians and public officials.

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File URL: http://www.carleton.ca/economics/wp-content/uploads/cep07-01.pdf
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Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 07-01.

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Length: 31 pages
Date of creation: 15 Mar 2007
Date of revision: 01 May 2008
Publication status: Published: Carleton Economic Papers
Handle: RePEc:car:carecp:07-01
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