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Where are the Rent Seekers?

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  • Arye L. Hillman
  • Heinrich Ursprung

Abstract

In a remarkably simple and yet in one of the most original and insightful observations of 20th century economics, Gordon Tullock observed 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. The question is then raised ‘where are the rent seekers?’ Tullock proposed that rent seeking was restrained by political accountability and ‘free-riding’ incentives in interest groups. We affirm Tullock’s explanations, which can be extended to locate rent seekers 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 highlights the significance of the recognition 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.

Suggested Citation

  • Arye L. Hillman & Heinrich Ursprung, 2016. "Where are the Rent Seekers?," CESifo Working Paper Series 5833, CESifo.
  • Handle: RePEc:ces:ceswps:_5833
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    Cited by:

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    3. Klaus Gründler & Arye L. Hillman, 2021. "Ambiguous Protection," CESifo Working Paper Series 8888, CESifo.
    4. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.
    5. Wilfred J. Ethier & Arye L. Hillman, 2017. "The Politics of International Trade," CESifo Working Paper Series 6456, CESifo.
    6. 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.
    7. Leppälä, Samuli, 2021. "A partially exclusive rent-seeking contest," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 60-75.
    8. 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..
    9. 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.
    10. Escalante, Edwar E., 2020. "Night watchers and terrorists," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 116-131.

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    More about this item

    Keywords

    rent seeking; rent creation; deadweight losses; income distribution; interest groups; contest models; Gordon Tullock; Gary Becker; Donald Wittman;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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