RENT‐SEEKING FIRMS AND CONSUMERS: AN EQUILIBRIUM ANALYSIS*

Torsten Schmidt

Economics and Politics, 1992, vol. 4, issue 2, 137-149

Abstract: This paper examines the probability of success in a rent‐seeking contest as a general function of the resources that both firms and consumers devote to lobbying the government. The object of lobbying is a possible restriction of market supply, where the likelihood that supply will be restricted to a given extent depends on everyone's lobbying efforts. In equilibrium the expected social loss due to rent‐seeking activities is at most equal to the size of the contested rent, and this upper bound does not depend on the active participation of consumers in the contest. Markets in which supply is not restricted may also be associated with rent‐seeking waste. Finally, consumers' rent‐seeking efforts are shown to be socially productive, both on the margin and in total.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecopol:v:4:y:1992:i:2:p:137-149

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