A Theory of Rent Seeking with Informational Foundations
Johan Lagerlof ()
No 5893, CEPR Discussion Papers from C.E.P.R. Discussion Papers
I develop a model of rent seeking with informational foundations and an arbitrary number of rent seekers, and I compare the results with Tullock's (1980) classic model where the influence activities are "black-boxed." Given the microfoundations, the welfare consequences of rent seeking can be studied. In particular, I show that competition among rent seekers can be socially beneficial, since the additional information that the decision maker gets access to makes the increase in rent-seeking expenditures worthwhile. However, the analysis also highlights a logic that, under natural parameter assumptions, makes the rent seekers spend more resources on rent seeking than is in society's interest, which is consistent with the spirit of the rent-seeking literature.
Keywords: competition; disclosure; information acquisition; rent seeking; welfare (search for similar items in EconPapers)
JEL-codes: D42 D43 D72 D83 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-knm and nep-pol
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Journal Article: A theory of rent seeking with informational foundations (2007)
Working Paper: A Theory of Rent Seeking with Informational Foundations (2006)
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