Efficient Influence Activities with Endogenous Rent

Maria Alessandra Antonelli

Public Choice, 2003, vol. 114, issue 1-2, 219-36

Abstract: This paper analyzes the effects of influence activities on organizational efficiency in a principal-agent framework with endogenous rent. It shows that, with endogenous rent, influence activities can improve efficiency even if their informative value is low. Effects on the dissipation rate of rent are also considered. In particular, it is shown that, with endogenous rent, more powerful incentives on influence activities only increase the dissipation rate when the sum of the elasticities of the influence costs function and of the production function is greater than one. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
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