Enduring Rents

Toke Aidt and Arye Hillman ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

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 rentgenerating regulations and policies. Moreover, lasting deregulation can preempt a substantial fraction of the potential rent seeking cost.

Keywords: Rent seeking; contests; rent dissipation; deregulation; liberalization; commitment. (search for similar items in EconPapers)
JEL-codes: D72 (search for similar items in EconPapers)
Pages: 24
Date: 2008-01
New Economics Papers: this item is included in nep-cdm and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0802

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