Enduring rents

Toke S Aidt () and Arye L. Hillman ()

European Journal of Political Economy, 2008, vol. 24, issue 3, pages 545-553

Abstract: Rent seeking is often studied with reference to a contemporaneous rent evaluated at a point in time. We study the social cost of rent seeking when rents endure over time, but may have to be re-contested because of imperfect rent protection, or may disappear because of deregulation. The present value of a contested rent measures the social cost of rent seeking, irrespective of imperfect rent protection and the prospect of deregulation. Rent seeking is discouraged by the inability of governments to commit to protect rents and by their inability to commit to rent-generating regulations and policies. Moreover, lasting deregulation can preempt a substantial fraction of the potential rent seeking cost.

Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:eee:poleco:v:24:y:2008:i:3:p:545-553

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