Rent-Seeking Measurement in Coal Mining by Means of Labour Unrest: An Application of the Distance Function

Ana Rodríguez-Álvarez, Ignacio Del Rosal and José Baños

No 2002/02, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: We propose a method based on the distance function to empirically estimate the social cost arising from rent seeking behaviour in declining industries. Due to import competition, the factors of a particular industry undergo losses in real income, and have incentives to seek protection. In the case of declining industries, workers play a central role and the losses in output due to strikes are used to quantify the social cost of rent seeking. In our model, strikes are considered as a “bad” input into the production process. We apply our approach to the case of Spanish coal mining. We have estimated a system of equations formed by the input distance function and cost share equations using annual data over the period 1974-1997. This procedure has allowed us to calculate the cost that strikes have imposed on the sector.

Keywords: Production theory; rent seeking; input distance function; shadow prices; coal sector (search for similar items in EconPapers)
Pages: 20
Date: 2002
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Working Paper: Rent-seeking measurement in coal mining by means of labour unrest: an application of the distance function (2002)
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