real estate agents in ghana a suitable case for regulation obeng odoom f real estate agents in ghana a suitable case for regulation regional studies this paper uses a qualitative approach to examine whether regulation would improve the effectiveness of the ghanaian estate agency market interviews with landlords estate agents clients and officials of the rent control department suggest that 1 most so called problems with unlicensed agents are actually landlord related problems 2 there is a camaraderie relationship between unlicensed agents and their clients which effectively provides a licence against fraud and 3 regulation would exacerbate unemployment and increase agency fees for these reasons regulation in general may not be in the public interest alternative ways of improving effectiveness in the ghanaian estate agency market are recommended obeng odoom f les agents immobiliers au ghana est ce qu il y a de bonnes raisons pour les reguler regional studies cet article emploie une facon qualitative afin d examiner si oui ou non la re

a dynamic analysis of the marketable permits approach to global warming policy a comparison of spatial and temporal flexibility abstract this paper presents a generalized dynamic model of greenhouse gas emissions trading under constraints on the volume of transactions an empirical version of the model is used to evaluate potentially cost saving flexibility mechanisms joint implementation and clean development mechanism and potentially cost adding restrictions supplementarity of the kyoto protocol the results indicate the greatest gains would stem from extending permit trading spatially among industrialized nations although sizable gains would also emanate from the inclusion of developing countries gains from intertemporal trading banking and borrowing are meager restrictions on the volume of permit purchases have by far the most costly effect when developing countries are incorporated into trading sensitivity tests with respect to differential discount rates across countries and technological change indicate the results are robust

change in co2 emission and its transmissions between korea and japan using international input output analysis abstract this paper is intended to analyze co 2 transmission between japan and south korea through international trade based on 1990 and 1995 international input output data it applied a residual free structural decomposition method proposed by chung and rhee chung h s rhee h c 2001 a residual free decomposition of the sources of carbon dioxide emissions a case of the korean industries energy 26 1 15 30 to emission related international input output analysis for the first time in the decomposition studies this paper is a case study regarding the manner and the extent to which co 2 emissions are influenced by international trade between japan an annex i country and south korea a non annex i country which is of particular interest for the carbon leakage issue in this paper we attempted to show which factors contributed to the changes in emission of the major greenhouse gas in south korea and japan the changes in emission are analyzed in terms of emission intensity input techniques demand composition and trade structures according to our analysis south korea a non annex i country has more energy intensive production structures than japan an annex i country south korea s trade pattern with japan reflects these production features resulting in the korea s comparative advantage in emission intensive products though the degree has somewhat mitigated in 1995 compared to 1990

monopoly vs competition in light of extraction norms this note demonstrates that whether the market is competitive or monopolistic need not be the result of ideology political power or non convexity of the technology the answer can be determined by a government that maximizes the extracted resources from the alternative market structures our claim is illustrated by assuming that demand and supply are linear functions and that the government can extract the same share of the producers profit under the alternative market structures this share can be extracted from the actual producers or from the potential producers who take part in the contest to get a license to produce

rents dissipation and lost treasures comment in an interesting recent paper dari mattiacci and parisi 2005 extended tullock s 1980 rent seeking game with an entry decision the mixed strategies identified by dari mattiacci and parisi for the case of increasing returns in the contest success function r2 do not constitute an equilibrium of the game they study however these strategies are an equilibrium if the strategy space of the game is restricted by a minimum expenditure requirement and this minimum expenditure requirement is an element of a specific interval

rent seeking contests with incomplete information we consider rent seeking contests with two players who each have private information about their own cost of effort we consider both discrete and continuous distributions of costs and give results for each case focusing on existence of equilibrium

an empirical investigation of the effects of rounding on the spf probabilities of decline and output growth histograms i consider the possibility that respondents to the survey of professional forecasters round their probability forecasts of the event that real output will decline in the future as well as their reported output growth probability distributions i make various plausible assumptions about respondents rounding practices and show how these impinge upon the apparent mismatch between probability forecasts of a decline in output and the probabilities of this event implied by the annual output growth histograms i find that rounding accounts for about a quarter of the inconsistent pairs of forecasts

privately informed seekers of an uncertain rent two departures from antecedent rent seeking models are invoked a rent of unknown size is sought and rent seekers obtain private imperfect estimates of this size a symmetric equilibrium for a fixed number of rent seekers is characterized and shown to underdissipate the rent then a model of the decision to obtain private information and participate in the rent seeking contest is built the symmetric equilibrium participation probability equates expected profit to participation costs a simple formula for underdissipation results dissipation is incomplete pre cisely by the expected aggregate participation costs if an award mechanism can attain a lower level of dissipation for a fixed number of seekers then it will raise the endogenous probability of partici pation and as a result will dissipate less rent in the equilibrium with an endogenous number of seekers

rent extraction with a type by type scheme an instrument to incorporate sustainable development into the cdm although the cdm is supposed to assist developing countries in achieving sustainable development sustainable development is not incorporated into the market aspect of the cdm by participating in the cdm developing countries may end up losing all cheap emissions reduction possibilities while obtaining little sustainability benefits this paper proposes rent extraction with a type by type scheme as an instrument to incorporate sustainable development into the cdm the rent extraction with a type by type scheme makes it possible for the cdm host country government to discourage the low cost projects that have little sustainability benefits and to extract more rent from the projects that are developed the main challenge of implementing this instrument is the uncertainty of the opportunity cost but the host country government can adjust the scheme for the uncertainty to achieve its goal therefore the type by type scheme will better assist the host country in achieving sustainable development than a single rate scheme

explanations of the inconsistencies in survey respondents forecasts a comparison of the point forecasts and the probability distributions of inflation and output growth made by individual respondents to the us survey of professional forecasters indicates that the two sets of forecasts are sometimes inconsistent we evaluate a number of possible explanations and find that not all forecasters update their histogram forecasts as new information arrives this is supported by the finding that the point forecasts are more accurate than the histograms in terms of first moment prediction c 2009 elsevier b v all rights reserved

computing multi period information constrained optima this paper presents a detailed theoretical derivation and justification for methods used to compute solutions to a multi period including infinite period continuum agent unobservedeffort economy actual solutions are displayed illustrating cross sectional variability in consumption and labour effort in the population at a point in time and variability for a typical individual over time the optimal tradeoff between insurance and incentives is explored and the issue of excess variability is addressed by consideration of the analogue full information economy and various restricted contracting regimes

international diversification of investments in climate change mitigation abstract numerous studies have shown that international emissions trading can significantly lower the costs of greenhouse gas ghg abatement economic models however ignore the substantial economic and political risks associated with investments in developing countries where according to these models a large share of global ghg abatement takes place we use a mean variance approach to compute international portfolios of carbon abatement activities that balance low abatement costs and investment risks expected returns are derived from marginal abatement cost curves the volatility of the growth rate of regional carbon dioxide emissions is used as an indicator of investment risk we find first that well diversified portfolios can significantly reduce investment risks second the least risk portfolio is distinct from the cost efficient allocation based on equalization of marginal abatement costs and much more costly to implement this indicates that existing models which neglect investment risks overestimate the cost savings due to international emissions trading

rent seeking behaviour and its economic costs in urban land transactions in accra ghana the existing body of knowledge attributes to informal land transactions in sub saharan african cities observed problems in city neighbourhoods substantial resources often backed by donor agencies are therefore being spent in revamping bureaux and governmental bodies in a bid to solve the problems this paper examines the economic impacts of this aspect of market intervention employing insights from rent seeking theory it estimates costs brought to bear on agents by government agencies involvement in the urban land market of accra ghana the sum of these wasteful diversions of resources is found to explain a great deal of the haphazard developments that have come to characterise many neighbourhoods in the city market led regulation emerges as the needed focus of future land policy and management strategy towards this the paper calls for the removal of existing unwarranted market interventions and the reorganisation of responsible bureaux in ways that would induce them to operate efficiently

dissipation of contestable rents by small numbers of contenders the theory of rent seeking with its origins in the observations of gordon tullock 1967 or to use jagdish bhagwati s 1982 proposed term the theory of directly unproductive profit seeking activities is concerned with the potentially adverse effects on resource allocation of incentives to cap ture and defend artificially contrived rents and transfers the scope for so cial loss proposed by the theory derives from the relation between the value of a contestable prize and the value of the resources attracted into the con test to determine the beneficiary of the prize underlying this social loss is a specification of how rational behavior by optimizing agents links the value of the prize sought to the resources expended it has been traditional to assume competitive behavior in describing the activities of lobbying and influence seeking then if some further condi tions are satisfied l the total value of the resources expended precisely equals the value of the prize sought so dissipation is complete 2 conse quently the social cost associated with contestability of a rent can be in ferred from the value of the rent itself and the detailed and hard to come by information on individual outlays made in the course of the contest be comes unnecessary by basing their analyses on competitive dissipation contributors to the rent seeking literature see the review by robert tollison 1982 have been able to presume that the observed value of a contested rent is an exact measure of the associated social cost of monopoly power or regu lation similarly in the trade theoretic literature where the rights contested are to quota premia or revenues from trade taxes krueger 1974 bhagwati

reaganomics and the use of collective rebates the purpose of this article was to demonstrate that a collective rebate can be an effective tool to reduce excessive government the idea is that the general public can be aroused to vote for and support political agendas that reduce government intervention bunching many pro competitive policies in one package a collective rebate offers an opportunity to turn the public against the special interests an attempt was made to extend the collective rebate principle to the fiscal policy employed by the regan administration with all of its faults notwithstanding it was shown that this fiscal policy could be interpreted as a successful application of the collective rebate principle

the monetary compensation mechanism an alternative to the clean development mechanism abstract one of the key challenges in resolving global warming problem is how to induce developing countries to reduce emissions the cdm was proposed in the kyoto protocol as a means of obtaining the cooperation of developing countries in controlling greenhouse gases but it has some intrinsic problems and has generated considerable controversy this paper presents an alternative mechanism the monetary compensation mechanism mcm i study the characteristics of this mechanism with a dynamic principal agent model by solving the model numerically i obtain the optimal solution for a scenario based on 1990 data the monetary compensation rate under the mcm is comparable to the price of cers in the cdm but the mcm has several advantages over the cdm

content protection and tariffs under monopoly and competition abstract this paper compares the relative efficiency of local content schemes and tariffs as alternative means of achieving certain non economic distributional objectives the efficiency comparison is made under the alternative assumptions that an intermediate good component is produced a competitively and b by a single firm the paper shows how the ranking of tariffs and content schemes i is sensitive to these assumptions and ii depends on the local content ratio and the elasticity of demand for components the possible implications of vertical integration in the production process and rent revenue seeking behaviour are also considered insofar as they affect the ranking of policies

on the measurement of rent seeking and its social opportunity cost utilizing 4 digit industry data by county we compare the allocation of resources across industries in state capital areas with noncapital areas we are able to identify which industries are expanded and contracted relative to noncapital areas our results provide the first direct evidence and measurement of the forgone productive activity resulting from resources being reallocated toward rent seeking and interest group activity our data also allow us to measure total rent seeking and also to isolate the extent of indirect and in kind rent seeking which can account for part of the tullock paradox

forecast encompassing tests and probability forecasts we consider tests of forecast encompassing for probability forecasts for both quadratic and logarithmic scoring rules we propose test statistics for the null of forecast encompassing present the limiting distributions of the test statistics and investigate the impact of estimating the forecasting models parameters on these distributions the small sample performance is investigated in terms of small numbers of forecasts and model estimation sample sizes we show the usefulness of the tests for the evaluation of recession probability forecasts from logit models with different leading indicators as explanatory variables and for evaluating survey based probability forecasts copyright c 2010 john wiley sons ltd

does ecological economics have a future contradiction and reinvention in the age of climate change abstract this paper addresses the role of neoclassical methodologies in ecological economics and the contradictions these methodologies pose to the field s critical founding principles we first consider robert costanza s treatment of nicholas stern s global deal and then survey climate change related articles published in this journal over the past five years this survey reveals how mainstream neoclassical methodologies dominate discourse and do so by marginalizing more critical political economy analyses this situation imperils the field s founding vision of a no growth steady state it also fails to address the related growth dynamics of capitalism without such a critical treatment the field s formal embrace of methodological pluralism actually entails an ideological empiricism that renders ecological economics theoretically incoherent this situation undermines the field s historical promise as an alternative economic paradigm ecological economics now faces a problematic future its survival in a form faithful to its founding vision will require an explicit choice to address its internal contradictions and reinvent itself in ways relevant to our contemporary context without such a choice ecological economics will likely succumb to an implicit acceptance of the hegemony of mainstream economic methodologies and their pro growth imperatives

influencing rent seeking contests this paper shows that a policy that uniformly increases contestants effort costs can lead to an increase in total effort in asymmetric settings this levels the playing field and therefore encourages weaker players who otherwise would have stayed out to enter paradoxically a contest designer whose only objective is to maximize total effort may thus wish to make rent seeking more difficult these results suggest that the often lamented bureaucratic red tape might in fact be a rational response to the problem of attracting lobbyists to participate in a contest

the economic theory of rent seeking tullock s concept of rent seeking was the first statement of a quantitative principle about the social costs of such activities as lobbying and favor seeking as such this part of tullock s legacy to modern economics is one of his most important contributions

coyote ugly the deadweight cost of rent seeking for immigration policy many studies use a harberger triangle method to estimate the immigration surplus to the native born population and conclude that the benefit of immigration is very small in proportion to the size of the us economy and thus the united states does not to stand to lose much if immigration is further restricted this calculation neglects the rent seeking costs that the us economy bears when immigration policy is politically determined this study estimates the rent seeking losses that the us economy could suffer if immigration policy were reformed to further close the borders

rent seeking and x inefficiency this paper discusses the social cost of monopoly with special attention given to the geometric representation of that social cost notably rent seeking and x inefficiency the possibility of an overlap between these two measures is examined in particular the paper addresses a problem of measure identification which highlights the need to reconsider the normative microfoundations of rent seeking

the design of rent seeking competitions in the standard tullock model of rent seeking as a noncooperative game aggregate expenditures by seekers can equal exceed or fall short of total rents depending on what is assumed about the number of seekers and the marginal return to a seeker s investment if the supply of an input into the rent seeking process is controlled by a politician who receives payment from seekers for it the indeterminacy of the process becomes a less serious problem he supplies it and designs the rent seeking game to maximize his wealth the author derives expressions for the number of seekers and the marginal return parameter which maximize the politician s wealth in one input and two input rent seeking processes

a note on poisson contests we apply the environmental equivalence property of poisson games myerson in int j game theory 27 375 392 1998b to show that in contests in which the number of contestants is a poisson random variable with at least two expected contestants and a non increasing return to effort ex ante aggregate effort is less than in a corresponding contest wherein the number of participants is equal to the expected number of contestants under uncertainty uncertainty about the number of participants in a rent seeking contest seems natural with rent seeking contests attracting socially wasteful investments of effort or scarce resources uncertainty generates a social benefit

on disclosure policy in contests with stochastic entry we study how a contest organizer who seeks to maximize participant effort should disclose the information on the actual number of contestants in an imperfectly discriminatory contest with stochastic entry when each potential contestant has a fixed probability of entering the contest the optimal disclosure policy depends crucially on the properties of the characteristic function h f f where f is the impact function the contest organizer prefers full disclosure full concealment if h is strictly concave strictly convex however the expected equilibrium effort is independent of the prevailing information disclosure policy if a linear h tullock contest applies

on the social costs of rent seeking versus the social costs of production flexibility in this paper an analysis is provided of two alternative methods of defensive behaviour by a firm first rent seeking and second potential adjustment by way of investing in product flexibility from the analysis it emerges that at times rent seeking may be socially superior less socially wasteful to other more traditional means of responding to threats this paper therefore suggests that in circumstances where some type of defensive or aggressive activity by firms is available rent seeking while constituting gross social waste may be a net social gain given the alternative options available to the firm

collective rent dissipation the theory of rent seeking was initiated by tullock 1967 1980 followed by krueger 1974 and posner 1975 and more recently extended in various directions by allard 1988 appelbaum and katz 1986a b c gradstein and nitzan 1989 hillman and katz 1984 1987 hillman and samet 1987 hillman and riley 1989 katz et al 1990 long and vousden 1987 ursprung 1990 and varian 1989 the purpose of this paper is to extend this theory by introducing the possibility of collective group rent seeking with voluntary individual decisions regarding their extent of participation in the collective rent seeking efforts

conjectural variations and the nature of equilibrium in rent seeking models in a symmetric two person rent seeking game it is shown that nonzero conjectural variations can be incorporated to yield a larger class of solutions than has been hitherto analyzed the author shows that the fraction of rents dissipated as expenditures by seekers depends on the conjectural variation which is assumed and that posner s assertion of full dissipation in his model only holds under a bertrand conjecture all admissible constant conjectural variations which are held by both players yield conjecturally consistent equilibria but the result no longer holds if the game has a systematic bias toward one player

symmetric two stage contests with budget constraints the impact of a budget constraint on individual expenditures is examined in two models of two stage contests with homogenous and risk neutral players competing to win a single indivisible commonly valued rent the set of players is partitioned into equally sized groups in the first model one contestant from each group survives to compete on the second stage against the other survivors in the second model one group survives the first stage and its members compete against each other on the second stage we derive and discuss the symmetric subgame perfect equilibrium solution for each model

seeking rents by setting rents the political economy of rent seeking in recent years there has been a large number of papers on the subject of rent seeking most such works on rent seeking have taken the rent as exogenously determined by regulators regulators howeve r may also be expected and indeed have been shown to be rent seeke rs and hence the determination of the rent itself should be endogeniz ed to reflect the fact that the rent setters are themselves rent se ekers in this paper the authors do this by presenting an analysis o f the interaction of regulators firms and consumers within a rent s eeking framework where all three groups are assumed to be self motiva ted the analysis is carried out under alternative assumptions regard ing the nature of the market and the reaction functions of the partic ipants policy implications are drawn where appropriate copyright 1987 by royal economic society

transboundary effects of environmental policy markets and emission leakages abstract one of many explanations for environmental kuznets curves for rich countries can be that dirty production is relocated to economies with laxer abatement regimes if this is caused by national abatement policies environmental stresses are transferred to other countries further the economic costs of national abatement policies can be shared with foreigners to some extent both through a lower demand for imports and losses of market shares for foreign competitors that produce cleaner products we quantify effects internally and abroad of a growth induced unilateral carbon tax policy in a rich open economy we find that the environmental benefits fall and the economic costs rise when a global rather than a national perspective is employed

the rhetoric and reality of redistribution it is customary when giving a presidential address to begin by remarking on how happy you feel i have an even stronger reason for being happy than most presidents it will at long last permit me to break into the southern economic journal up to this point referees of that august institution have always rejected everything that i sent them finally however i am privileged to put an unrefereed paper in the journal and hence do not have to worry about this one being rejected the audience may feel that although it is nice for me it is hard on the journal but under the sacred traditions of the southern economic association the editors and referees can do nothing about it the blame if there is any has to be laid on me and not on the management of the journal in a way the fact that i will not face referees is important because in this paper i propose to violate a number of implicit taboos in the discussion of income redistribution indeed i propose to argue that most of the current discussion of income redistribution is drastically defective this will not only include rawls it will include what most members of the economic profession normally say on the subject and presumably what the potential referees of this paper would have thought let me very briefly survey the existing economic as opposed to the philosophic literature on the redistribution of income firstly a good many economists have said simply that economics can say nothing about the subject because somebody gains and somebody loses but we can t say whether this is a good or a bad thing with our apparatus hochman and rodgers 9 have started another tradition of dealing with income redistribution in which the government is seen as simply organizing what is essentially a voluntary transfer from the better off american citizens to the less well off american citizens why the government should be used as an instrumentality for this kind of transfer was interestingly enough first explained by milton friedman 6 191 92 such redistribution has the interesting characteristic that it does not actually involve redistribution because the people who make the gift are maximizing their own utility and hence are better off it is a case in which human preferences are so arranged that a given dollar of income benefits two people a full dollar s worth the donor gains a dollar from expending money at its best use to him i e making a gift to the poor and the poor gain the dollar in a somewhat metaphysical sense it can be said here

subglobal climate change actions and carbon leakage the implication of international capital flows abstract the climate change agreement negotiated in kyoto obliges the oecd countries to initiate the international effort of abating the anthropogenic greenhouse gas emissions in the event that such an initiative is taken the associated competitive pressures may induce significant offsetting increases in non oecd emissions a process generally known as leakage the current models used to study these competitive effects have adopted an empirically inconsistent view of the world that international capital markets are perfectly integrated to the extent that restrictions on the international mobility of capital affect regional investment decisions it might be expected that the competitive impacts drawn from these models could significantly be altered this paper addresses this issue the paper suggests that these competitive effects are not really contingent on capital flows with a regionally disaggregated dynamic model of the world economy we show a quite robust result that carbon leakage is virtually unaffected by the presence of restrictions on the mobility of international capital

the economic design of sporting contests what is the optimal number of entrants in a race or the optimal number of teams in a baseball league what is the optimal structure of prizes for a golf tournament or degree of revenue sharing for a football championship how evenly balanced should the competing teams be in the nascar or formula one championships what is the maximum number of entrants per nation to the olympic games that should be permitted what quota of qualifying teams to the soccer world cup should be allocated to the developing nations

a generalized model of rent seeking behavior in this paper i present a formal analysis of rent seeking games in which the players valuations for the prize are represented as vectors the players in this game are risk neutral and may not be indifferent to who wins the contestable rent if it is someone else both tullock s original rent seeking model and the public goods rent seeking model by katz et al turn out to be special cases of this more general model

illegal markets and the social costs of rent seeking this paper argues that making goods or services illegal results in an increase in the social costs associated with rent seeking the increased social cost is in the form of negative externalities that result from market participants use of coercion and violence in attempts to control trade in the illegal good consequently the social costs of rent seeking will exceed the value of resources dissipated in rent seeking competition and where the external costs exceed the undissipated portion of the tullock cost the social cost of rent seeking is greater than the sum of tullock and harberger costs

on the limits to rent seeking waste the general equilibrium framework developed in this paper for analyzing the limits to rent seeking waste goes beyond the existing literature by incorporating tax financed public subsidies and rent protecting activities into a rent seeking environment we show that the limits to rent seeking waste depend on the extent to which government subsidizes rent seekers and rent defenders through tax financed grants contracts and favors as observed by tullock 1967 the diversion of resources toward efforts to acquire a monopoly rent causes a social waste in addition to the excess burden of monopoly pricing measured by the harberger triangle in the absence of government subsidies to rent seeking and under competitive conditions this additional waste cannot exceed the maximum monopoly rent attainable however if government subsidizes expenditures on rent seeking then the additional waste can exceed the tullock rectangle of monopoly rent and in the limit equal the economy s maximum potential social surplus

risk lovers and the rent over investment puzzle in this paper we prove existence and uniqueness of equilibrium in a rent seeking contest given a class of heterogeneous risk loving players we explore the role third order risk attitude plays in equilibrium and find that imprudence is sufficient for risk lovers to increase rent seeking investment above the risk neutral outcome moreover we show that rent can be fully dissipated in a standard tullock contest played by a large number of risk lovers

the use and effect of political propaganda in democracies this paper examines the influence of political propaganda on voters and analyses the behavior of the interest groups in the face of the influence being exercised by propaganda semi truths are distributed among the electorate the decision taken by a voter results from his basic opinion and from the parts of information he receives the analysis shows that the greater the likelihood of a certain decision being reached by a fully informed electorate the more probable it is that the same decision will be reached by a rationally uninformed electorate the pecuniary interest of an interest group is however also positively correlated with the probability that the electorate reaches a decision which is agreeable to that interest group it has finally become appar ent that the results of the approach concur well with empirical studies

efficient rent seeking under varying cost structures the rent seeking paradigm which was introduced by tullock 1967 has proven useful for exploring a variety of economic decisions that lie outside the traditional profit maximizing framework early applications of tullock s insight becker 1968 krueger 1974 posner 1975 demsetz 1976 foster 1981 and others usually assumed the entire value of the rent would be dissipated by competition following the fashion of economic profits in competitive markets in 1980 tullock structured a simple game reflecting the decisions made in rent seeking the results generated by his model suggest residual rents may accrue to rent seekers and under certain conditions resist dissipation a number of studies followed tullock s 1980 paper corcoran 1984 corcoran and karels 1985 higgins shugart and tollison 1985 tullock 1984 1985 and 1987 which explore the dissipation of excess rents under various assumptions

the empirical measurement of rent seeking costs this survey focuses on the efforts carried out mainly by public choice scholars to measure the social cost of rent seeking the concept introduced by gordon tullock in 1967 and coined by anne krueger in 1974 is well known and accepted by the profession but its empirical measurement has fallen behind with respect to its theoretical formulation an often criticized lack in the literature although there are good general surveys none has specifically focused on reviewing the empirical efforts made to measure the phenomenon the purpose of this paper is to provide such a survey it could be said that the rent seeking concept has been fully integrated into economic jargon it is commonly used when some agent seeks to obtain an artificial transfer usually from government and covers all the actions efforts or expenses that the agent has to carry out to obtain the prize the key issue however is the possible social waste that arises in these situations the empirical efforts to measure such waste constitute the main purpose of this survey the concept of rent seeking was introduced by tullock 1967 although the term was first coined by krueger 1974 in a paper not related to the former in a recent paper tullock himself wrote of the history of the concept and the intellectual context within which it arose tullock 2003 starting with the pioneering work by harberger 1954 several studies were conducted during the 1950s in which the calculation of the social cost of monopolies and tariffs always gave the result of very modest figures the first response to these results was made by leibenstein 1966 and his x efficiency which refers to a hypothetical loss in efficiency due to the absence of competition shortly after leibenstein s paper appeared tullock argued that the deadweight costs of monopoly and tariffs understate the true social cost because the expenditures made to capture related rents have to be included so rectangles as well as harberger s triangles have to be included in the calculations let us see this argument once more figure 1 depicts the iconic tullock graphic analysis of rent seeking it represents the demand schedule d for a monopolized good where pm is the monopoly

greenhouse gas emission controls in an open economy to examine how greenhouse gas emission controls affect a country s industrial and trade structures this article presents an open economy model that has both ricardian and heckscher ohlin features we specifically compare emission quotas emission taxes and emission standards the patterns of production and trade critically hinge on those policy tools it is shown that a domestic emission control may lead to carbon leakage and may not reduce the world emissions and that emission standards may work as a hidden production subsidy toward an emission intensive industry

on perfect rent dissipation if economists are united on anything it is the proposition that monopoly prices reduce economic welfare by preventing the realization of the maximum gains from trade in any market the extent of such distortions to efficiency are often called harberger costs after arnold harberger s 1954 provocative attempt to measure the extent of these losses in the u s economy more recent analysis has revealed that when monopoly power is achieved via regulation at least part of the monopoly rents so gained will not be simple transfers from consumers to producers but will be dissipated by producers rent seeking activity since such activity employs real resources there are additional costs to monopolization beyond the harberger costs as emphasized by gordon tullock 1967 and richard posner 1975 indeed posner and others have argued that if competition for the monopoly rents is perfect all of the expected rents from regulation will be converted to welfare losses while franklin fisher s 1985 comment has qualified this conclusion somewhat the upshot of the debate is that the rent seeking or tullock costs may greatly exceed the harberger costs 1 another recent strand of the analysis concerns the time pattern over which monopoly returns are dissipated by competition to gain and hold the monopoly right robert mccormick et al 1984 emphasize that to the extent such expenditures are sunk they are forever lost and not recoverable by deregulation while conceding the point martin cherkes et al 1986 argue that most rentseeking expenditures are recurring not sunk and therefore large gains from deregulation remain the purpose of this essay is to point out that recurring or sunk even the largest specification of the harberger and tullock costs of regulatory monopolization may fall far short of the actual welfare costs this is because the analysis concentrates on the rent seeking tullock costs and largely ignores the parallel rent defending2 tullock costs a proper assessment of such rent defending tullock costs might more than double the maximum welfare costs of regulation suggested by posner

climate change policy market structure and carbon leakage abstract the 1997 kyoto protocol on climate change obliges the industrialized countries to initiate the international effort of abating anthropogenic greenhouse gas ghg emissions if such an initiative is to be taken the associated competitive effects may lead to significant relocation of developed countries energy intensive production this paper examines this issue i adopt an oligopolistic structure combined with increasing returns to scale production technologies to represent the strategic interaction among the firms producing energy intensive products this representation is then embedded within a multi regional computable general equilibrium model which in turn is used for quantifying these relocational effects the results suggest that significant relocation of energy intensive industries away from the oecd may occur depending on the type of market structure with leakage rates as high as 130 in which case ghg control policies in the industrialized countries actually lead to higher global emissions

are rents fully dissipated students of rent seeking have erred in focusing their attention exclusively on the analysis of competitions for exogenously specified transfers when redistributive policies are treated as endogenous choices it is clear that there are both incentives and opportunities for policymakers to design them in ways that prevent the wasteful dissipation of a large proportion of the intended transfers an analytical framework that treats policy design in this way is capable of explaining a variety of common attributes of redistributive policies that are apparent anomalies under the traditional approach to rent seeking furthermore we predict and find supporting evidence that authoritarian regimes tend to be associated with higher ratios of government revenue to total income than do democracies we attribute this tendency to the substantially greater potential for dissipative competition for revenues under democracy than under dictatorship finally available estimates of lobbying expenditures and rents transferred under the recent federal crude oil controls contradict the hypothesis that rents are fully or almost fully disspated through political competition

long run equilibrium and total expenditures in rent seeking a comment although corcoran is mathematically correct i believe his comment is not very helpful in order to discuss the matter in some detail the reader should consult table 7 1 from my original efficient rent seeking reproduced on page 92 1 this shows the equilibrium investment of each individual different numbers of individuals playing the game n and differing values of r table 7 2 also reproduced on page 93 shows the total investment

stackelberg rent seeking in this paper i present a formal analysis of rent seeking games in which the players do not move simultaneously i consider rent seeking situations where the players are risk neutral and may value the prize differently the subgame perfect equilibrium outcome in this stackelberg game provides several surprising and interesting results i extend the problem to deal with cases of in complete information concerning the value a player has for the politically contestable rent

costly distribution and the non equivalence of tariffs and quotas when governments impose a quota or tariff on imports it is well known that the resulting rents and revenues trigger costly rent seeking and revenue seeking activities which are welfare reducing and may be economically more significant than the efficiency losses resulting from the protectionist induced resource misallocation repeated interaction among firms can eliminate wasteful rent and revenue seeking expenditures through cooperation we show that while aggregate outcomes are equivalent under tariffs and quotas if cooperation arises the conditions under which cooperation arises differ by policy this difference arises because a firm must incur additional cost to physically import and distribute the goods associated with additional quota licenses whereas there is no such cost when it comes to consuming additional tariff revenue thus quotas and tariffs are non equivalent we provide a simple sufficient condition under which cooperative elimination of rent seeking under quotas is easier than cooperative elimination of revenue seeking under tariffs and therefore a quota is the preferred policy whenever the policy admits cooperation

comparing the point predictions and subjective probability distributions of professional forecasters we use data from the survey of professional forecasters spf to compare point predictions of gross domestic product gdp growth and inflation with the subjective probability distributions held by forecasters we find that most spf point predictions are quite close to the central tendencies of forecasters subjective distributions tend to be asymmetric with spf forecasters tending to report point predictions that give a more favorable view of the economy than do their subjective means medians modes

risk averse rent seekers and the social cost of monopoly power there is now quite general recognition that the social cost of monopoly power encompasses the resources expended by individuals seeking to become the beneficiaries of monopoly rents however since the activity of rent seeking is generally not observable direct estimates of resources expended in quests to acquire monopoly power are usually impossible to come by 1 as a consequence the indirect approach of taking the observed value of monopoly rents as indicative of the unobserved value of the resources expended in rent seeking is quite generally adopted in approaches to evaluation of the social cost of such activity

returns to effort in rent seeking games in the traditional formulation of rent seeking games increasing returns to effort are characterized by an exponent r 1 however when the value of the rent is normalized to 1 the players effort levels a and b will typically be less than 1 thus when a 1 the value of ar decreases as r increases contradicting the interpretation of r 1 as representing increasing returns to effort this apparent defect in the mathematization of the problem seems to suggest that a different interpretation of r is required whenever a 1 upsetting the uniformity and elegance of the model in this short note we demonstrate that the perceived problem is illusory and that the usual interpretation of r is satisfactory for all values of a

forecast uncertainty ex ante and ex post u s inflation and output growth survey respondents who make point predictions and histogram forecasts of macro variables reveal both how uncertain they believe the future to be ex ante as well as their ex post performance macroeconomic forecasters tend to be overconfident at horizons of a year or more but overestimate i e are underconfident regarding the uncertainty surrounding their predictions at short horizons ex ante uncertainty remains at a high level compared to the ex post measure as the forecast horizon shortens there is little evidence of a link between individuals ex post forecast accuracy and their ex ante subjective assessments

rent seeking rent defending and rent dissipation in the preceding analyses of rent defending the posner model yielded welfare losses in excess of the combined areas of the tullock rectangle and the harberger triangle in only one instance furthermore this particular circumstance necessitated voluntary participation in a game with a negative expected value 13 for the tullock rogerson model the explicit addition of rent defenders had no impact on aggregate dissipation

evaluating rent seeking losses do the welfare gains of lobbyists count the purpose of this paper is to help reduce the confusion that some readers of the rent seeking literature have about the scope of rent seeking losses in conversations with economists only casually familiar with the literature one often hears the question don t the welfare gains of lobbyists count in other words aren t rent seeking losses actually the gains of lobbyists and thus simply the result of miscounting the benefits the answer to that question is simply no but to my knowledge no one has demonstrated the logic of this fundamental point a secondary purpose of the paper is to clarify the extent of rent seeking losses associated with monopolizing activities this paper demonstrates the tullock rectangle understates the extent of rent seeking losses in circumstances where alternative uses of resources are productive in the sense that positive net benefits could have been generated to simplify suppose that a firm or group of firms spends c dollars in order to raise prices above competitive levels say by having an entry barrier of one sort or another enacted by the local legislature the result will be a higher market price and a harberger dead weight loss triangle of the usual sort this result is depicted in figure 1 as the shaded triangle above po immediately to the left of the demand curve the maximum amount that would be mono

long run equilibrium and total expenditures in rent seeking the lure of excess profits or rents associated with monopoly power gives rise to expenditures to obtain these rents competitive rent seeking behavior is recognized as a factor which must be included among the wastes associated with monopoly power tullock 1967 posner 1975 1 the expenditures are aimed at transferring wealth rather than its creation and the use of resources to obtain this transfer is a loss to society how important rent seeking is as a part of the total monopolistic waste hinges on the size of the total expenditures induced by a given level of excess profits

why economic reforms fail in the soviet system a property rights based approach jan winiecki why do economic reforms fail in soviet type systems despite the obvious interest of ruling groups in improving the performance of their ailing economies the author applies a property rights based analysis stressing modes of rent maximization by ruling groups as a crucial explanatory variable party apparatchiks and economic bureaucrats particularly benefit from persistent interference in the economic sphere and consequently are most interested in maintaining the status quo the author surveys the impact of these motivations on the content of economic reforms outlines the strategies of counterreformers and predicts the future of reforms in soviet type economies 1 introduction in analyzing the disequilibrium characteristics of contemporary western economies mancur olson 1982 1984a 1984b agrees with the neoclassical macroeconomists in finding that given the tendencies of markets to clear and given the rational expectations of economic agents any disequilibrium indicates that all mutually advantageous transactions have not been consummated having made this point however he asks what can make agents ignore the potential gains from unconsummated transactions and turns his attention toward the structure of incentives and thus of institutions and policies olson insists and rightly so that a satisfactory static and dynamic macroeconomic theory has to explain who among key actors has the incentive to generate economic growth and equilibrate the economy and who does not furthermore no government even an authoritarian one has an incentive to generate serious recessions or disequilibria olson 1984a 637 writes that even in dictatorial systems the dictator has an incentive to make the economy of the country he controls work better since this will generate more tax receipts he can use as he pleases and usually also reduce dissent olson s arguments about incentives institutions and disequilibria offer an ideal basis for an inquiry into why reforms fail in soviet type economies stes in olson s theories of incentives the old roman principle of criminal law cui prodest who gained is applied to modem economies and the results suggest that contrary to widespread opinion it is not necessarily the small but powerful group of high and highest leaders that stands to gain most in terms of power and privilege from the preservation of the existing order a powerful political elite could satisfy its desires for both power and privilege through an alternative undemocratic system one which involves authoritarian don ts rather than totalitarian do s in that perspective the inefficient system of economic control typical in stes involving centrally planned production goals and input rationing would not be a condition sine qua non of an authoritarian solution since totalitarian command and control systems persist however one must seek groups other than the powerful and privileged few which have incentives to resist reforms and keep the economy inefficient the following sections identify the membership and motives of groups having strong incentives to keep the stes inefficient and prevent successful i e market oriented reforms we show how those groups operate and analyze their effects on the economic performance of their countries first the incentives for these groups to prevent decentralized management in the state sector are spelled out then their incentives to prevent the expansion of the more efficient private sector are outlined third having identified who benefits from the status quo and why the paper discusses when and how market oriented reforms are aborted limited or reversed by those who stand to gain from the reforms failure the last two sections consider the prospects of current attempts at economic reform in three specific countries poland the ussr and china and the prospects for economic reform in stes more generally

rent seeking with non identical sharing rules the primary object of this paper is to examine the role of differential sharing rules within a collective rent seeking setting on the possible non existence of nash equilibrium focusing on groups that distribute part of the rent equally among their members and the residual according to relative effort we show that in rent seeking societies applying the two polar sharing rules equilibrium never exists in the general case where groups apply different but not necessarily the polar sharing rules we study the relationship between group variability in distributing rents and the problem of non existence of equilibrium in the rent seeking game

transaction costs institutional rigidities and the size of the clean development mechanism transaction costs and institutional rigidities will reduce the attractiveness of the kyoto protocol flexibility mechanisms compared to domestic greenhouse gas abatement options the clean development mechanism cdm in particular is likely to entail considerable costs of baseline development project registration verification and certification the activities implemented jointly pilot phase and the prototype carbon fund programme give indications about these costs there is evidence that projects with high implementation costs have high transaction costs as well moreover cdm projects have to be approved by host country institutions and so far only a small share of host countries has been able to set up these institutions several of the larger host countries intend to only approve projects if the market price is above a certain threshold some governments will also levy fees to finance costs of approval bodies we assess these issues using a quantitative model of the kyoto protocol permit market we conclude that while changes in demand from annex b countries remain the crucial factor the size of the cdm will depend to a significant degree on transaction costs and institutional barriers in host countries

joint implementation strategic reactions and possible remedies this paper investigates the promising proposal of joint implementation ji to mitigate greenhouse gas emissions this was ultimately the only concrete outcome of the conference on climate change in berlin albeit restricted to a pilot phase the basic idea given the public s awareness of global warming sounds economically plausible the industrialized countries the only ones required to stabilize and lower carbon emissions can search for cheaper reductions of greenhouse gas emissions in developing countries and economies in transition however this proposal leads to strategic reactions by developing countries reinforced by the fact that this cheating coincides with the interest of the industrialized country in short this proposal will lead to cheating given asymmetric information and will thus produce largely faked reductions in emissions on the constructive side an efficient mechanism retaining the spirit of ji is derived which deters strategic reactions this differs from a usual principal agent problem through an additional hierarchical layer a global authority e g the conference of parties on climate change an industrialized country and a developing country the unavoidable loss that is even associated with an optimal scheme due to strategic behavioural reality the first best optimum is unattainable except at the top leads of course to much less glamorous predictions in emission reductions moreover the implicit subsidization scheme focuses and favours on already efficient partners

a theory of price control price or rent control is but one of many forms of legislative action which interfere with private contracting in the market place to delimit the scope of my analysis i shall use the term price control to refer only to any set of regulations which satisfies the following three conditions first the control must fix the price or income terms of private contracts this categorically excludes any laws which regulate the distribution of income among the contracting parties on a share or percentage basis 2 second the control must involve no appropriation of proceeds to or from the government taxation and subsidization are thus excluded finally the fixing of price must not be associated with direct government sales purchases or manipulation of resources so as to maintain the regulated price 3 by this stipulation price support is also excluded even on such terms legal regulations to control price are still many and varied to evaluate our understanding of the class of phenomena which we seek to explain it is essential that we discover implications refutable by facts by this criterion the available body of economic theory pertaining to price control is deficient indeed the massive literature on the subject offers few such implications 4 an alternative approach to analyzing the observable effects of price control is presented here

tollison costs and technological innovation the case of environmental regulation this paper departs from the tullock cost paradigm that views competition for monopoly privilege as a welfare inimical process that wastefully dissipates preexisting producers surplus and occasionally leads to inefficient increases in costs and counterproductive uses of scarce resources the potential availability of rent seeking may bring about the elimination of inefficient regulatory regimes that retard or prevent the introduction of cost reducing innovations air quality management is but one area in which innovation rent seeking holds promise for concrete welfare gains researchers may wish to focus on institutional mechanisms designed to overcome the transactions costs and free rider disincentives to the formation of a coalition to seek innovation rents an example of such a mechanism might be a joint venture that requires all venture members to engage in lobbying and to contribute to collective research efforts these unaddressed questions await future research

how to make the clean development mechanism sustainable the potential of rent extraction the clean development mechanism cdm should foster sustainable development and greenhouse gas emission reductions the design of the cdm and first experience suggest that it may not achieve these goals developing countries hosting cdm projects may lose cheap emission reduction possibilities for their own future use and sustainable development and technology transfer may not take place on the other hand the cdm has the potential to generate considerable rents if permit prices are high or costs low to account for equity and distributional issues a deliberate decision on how to distribute these rents could be taken and the potential failure of the cdm in meeting its goals calls for some further regulation i suggest to combine these two issues and to extract the rents by a profit tax ideally the tax revenues could contribute to national sustainable development strategies to offset external costs imposed by cdm projects and to extract part of the resource rent they may generate the international character of the cdm could offer a frame for internationally coordinated tax design this would hedge against a potential race to the bottom

rent seeking behaviour of retaliating agents this paper has examined a rent seeking game where the players take a more sophisticated approach to evaluating the potential strategies and counter strategies of their rivals than in the standard nash case we have derived the conditions for the existence of symmetric and nonsymmetric equilibria for the game and derived the properties of these equilibria three results merit repeating first we find that rent dissipation will not in general be complete second and in contrast to much of the traditional literature we find that the socially optimal result of zero rent seeking is sometimes a feasible equilibrium outcome for our game finally there exist rent seeking configurations in which the best play of one of the rivals is to withdraw from the game or alternatively stated where it is not optimal for a rival to contest the rent by entering the game in these nonsymmetric cases it would appear that tullock s conjecture about the value of preemptive moves remains valid this is true even when the strategies and counter strategies available to the players are much more complex than in the traditional nash approach

winner pay contests we analyze winner pay contests in which players select bids the winner is determined probabilistically through a contest success function and only the winner must pay her bid we show that a pure strategy nash equilibrium exists and is unique under weak assumptions on the contest success function we determine the nash equilibrium for several examples we also consider how equilibrium bids are influenced by private information about the value of winning the contest

economic ethics and institutional change our economic system the market economy is a part of a broader system or society we frequently study the operation of the market economy as if it were autonomous even though there are many complex and mutual relationships between society the economic system and the other systems political cultural religious legal etc that form part of society in a market economy we may identify several components a frame or background in which the economic activity takes place a set of ideas and theories the values shared by this society the set of institutions norms and rules that control the economic behavior of people and the incentives or motivations of the economic agents the play of these elements defines the operation of a market economy is ethics an institution or does it belong to the set of values and ideas in this paper i will discuss the role of institutions norms and rules in society with special reference to the economic system in order to gain insight into the relationship between institutions and ethics i study first the concept and features of social institutions and norms second institutional change and third the relationship between ethics and institutions

rent seeking with multiple winners this paper examines the impact of the number of winners allowed by regulators on rentseeking expenditures it is demonstrated in a widely used model that an increase in the number of winners will decrease total rent seeking expenditures this result is generally obtained regardless of whether the firms are risk averse or risk lovers when regulators award coveted market franchises there will be smaller welfare losses if more winners are allowed

efficient rents 2 free entry and efficient rent seeking in the competition for a monopoly right in which the number of bidders is fixed tullock and others have found the value of the resources spent in the aggregate to capture the transfer to be sometimes less than and sometimes greater than the value of the monopoly we think this approach to be incomplete since it leaves unanswered the question of what determines the number of individuals who will vie for the right to be the monopolist it is unsatisfactory to imagine for example that the franchisor sets the number of contestants one could then foresee that rent seeking would arise to influence the permissible number of bidders and this merely moves the rent seeking dissipation question one step back