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A model of capital accumulation and rent-seeking

Author

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  • Barelli, Paulo
  • Pessôa, Samuel de Abreu

Abstract

A simple model incorporating rent-seeking into the standard neoclassical model of capital accumulation is presented. It embodies the idea that the performance of an economy depends on the efficiency of its institutions. It is shown that welfare is positively affected by the institutional efficiency, although output is not necessarily so. It is also shown that an economy with a monopolistic rent-seeker performs better than one with a competitive rent-seeking industry.

Suggested Citation

  • Barelli, Paulo & Pessôa, Samuel de Abreu, 2002. "A model of capital accumulation and rent-seeking," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 449, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  • Handle: RePEc:fgv:epgewp:449
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    References listed on IDEAS

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    Cited by:

    1. Dzhumashev, Ratbek, 2008. "Corruption and Disposable Risk," MPRA Paper 11772, University Library of Munich, Germany.
    2. Ratbek, Ratbek, 2010. "Nonlinear effect of corruption, uncertainty, and growth," MPRA Paper 24834, University Library of Munich, Germany.

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