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Rent-seeking measurement in coal mining by means of labour unrest: an application of the distance function

Author

Listed:
  • Rodriguez-Alvarez, Ana
  • Del Rosal, Ignacio
  • Baños Pino, Jose

Abstract

We propose a method based on the distance function to empirically estimate the social cost arising from rent seeking behaviour in declining industries. Due to import competition, the factors of a particular industry undergo losses in real income, and have incentives to seek protection. In the case of declining industries, workers play a central role and the losses in output due to strikes are used to quantify the social cost of rent seeking. In our model, strikes are considered as a “bad” input into the production process. We apply our approach to the case of Spanish coal mining. We have estimated a system of equations formed by the input distance function and cost share equations using annual data over the period 1974-1997. This procedure has allowed us to calculate the cost that strikes have imposed on the sector

Suggested Citation

  • Rodriguez-Alvarez, Ana & Del Rosal, Ignacio & Baños Pino, Jose, 2002. "Rent-seeking measurement in coal mining by means of labour unrest: an application of the distance function," MPRA Paper 3682, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:3682
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    References listed on IDEAS

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    1. Fare, Rolf & Grosskopf, Shawna, 1990. "A distance function approach to price efficiency," Journal of Public Economics, Elsevier, vol. 43(1), pages 123-126, October.
    2. Robert Baldwin, 1984. "Rent-seeking and trade policy: An industry approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 120(4), pages 662-677, December.
    3. Ferrier, Gary D. & Lovell, C. A. Knox, 1990. "Measuring cost efficiency in banking : Econometric and linear programming evidence," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 229-245.
    4. Ignacio del Rosal & Alberto Fonseca, 2001. "Rent-seeking measurement by means of labour unrest in trade-related adjustment processes. A note," Applied Economics Letters, Taylor & Francis Journals, vol. 8(4), pages 273-277.
    5. Tullock, Gordon, 1997. "Where Is the Rectangle?," Public Choice, Springer, vol. 91(2), pages 149-159, April.
    6. Cornes,Richard, 1992. "Duality and Modern Economics," Cambridge Books, Cambridge University Press, number 9780521336017.
    7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    8. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    9. Rolf Färe & Shawna Grosskopf, 1998. "Shadow Pricing of Good and Bad Commodities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 584-590.
    10. Battese, George & Rao, D.S. Prasada & Walujadi, Dedi, 2001. "Technical Efficiency and Productivity Potential of Firms Using a Stochastic Metaproduction Frontier," Efficiency Series Papers 2001/08, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Production theory; rent seeking; input distance function; shadow prices; coal sector;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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