the democratic political economy of progressive income taxation why do both left and right political parties typically propose progressive income taxation schemes in political competition analysis of this problem has been hindered by the two dimensionality of the issue space to give parties a choice over a domain that contains both progressive and regressive income tax policies requires an issue space that is at least two dimensional nash equilibrium in pure strategies of the standard two party game whose players have complete preferences over a two dimensional policy space generically fails to exist i introduce a new equilibrium concept for political games based on the fact of factional conflict within parties each party is supposed to consist of reformists militants and opportunists each faction has a complete preference order on policy space but together they can only agree on a partial order nash equilibria of the two party game where the policy space consists of all quadratic income tax functions and each party is represented by its partial order exist and it is shown that in such equilibria both parties propose progressive income taxation

do too many cooks always spoil the stew an experimental analysis of rent seeking and the role of a strategic buyer laboratory methods are used to evaluate the effects of institutional arrangements and rent defending activity on rent seeking auction outcomes in part nash equilibrium predictions are a useful behavioral guide as predicted more rents are dissipated in perfectly discriminating auctions where the high bidder wins than in lotteries where relative bids determine the chance of winning also as predicted the introduction of a rent defending buyer reduces social costs nevertheless the social costs of rent seeking consistently exceed predicted levels moreover individual bidding especially by buyers deviates markedly from nash predictions

secular cost changes and the size of government towards a generalized theory abstract baumol s cost disease account of government growth is contrasted with that of kau and rubin who focus on decreasing costs of tax collection over time the apparent paradox wherein the first theory explains government growth by cost increases and the second by way of cost decreases is technically resolved why both theories seem to be able to stand up to empirical tests even though they use similar data is then explained finally public choice analysis is employed to reveal further potential for the ultimate construction of one all embracing secular cost change theory of government growth

imperfect rent dissipation with unionized labor traditional rent seeking theory focused only on socially wasteful expenditures by firms competing for restrictive regulations more recently rent defending expenditures by consumers have also been taken into account this paper extends the analysis by adding rent sharing expenditures by organized labor the paper merges the tullock lottery model and the monopoly union model and considers both a costless and a costly wage bargaining mechanism the participation of consumers and workers in the distributional contest is shown to reduce rather than increase the social cost of restrictive regulations the participation of consumers and workers also raises the probability of deregulation

the social costs of monopoly and regulation posner reconsidered focuses on social costs of monopoly and trade regulation in the united states benefit of marginal changes on antitrust activities equality of cost in obtaining monopoly and expected profit of monopolist elasticity of inputs in obtaining monopoly ebsco

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

a consumer as an entrant in the norwegian cement market this paper sheds light on the strategy of two entrants in the norwegian cement market where both started importing cement one entrant was an initial consumer of the incumbent s product and thus imported for own consumption the author demonstrates that this type of entrant will undertake a sunk investment to have access to a second supplier in cases where other types of entrants are deterred both types of entrants must accept a high import price if the incumbent can purchase the exclusive right to import from foreign suppliers the author finds that the two observed entry attempts are consistent with the model s predictions copyright 1993 by blackwell publishing ltd

the effects of partisan alignment on the allocation of intergovernmental transfers differences in differences estimates for spain abstract in this paper we test the hypothesis that municipalities aligned with upper tier grantor governments i e controlled by the same party will receive more grants than those that are unaligned we use a rich spanish database which provides information on grants received by nearly 900 municipalities during the period 1993 2003 from three different upper tier governments i e central regional and upper local since three elections were held at each tier during this period we have enough within municipality variation in partisan alignment to provide differences in differences estimates of the effects of alignment on the amount of grants coming from each source moreover the fact that a municipality may simultaneously receive grants from aligned and unaligned grantors allows us to use a triple differences estimator which consists of estimating the effects of changing alignment status on the change in grants coming from the aligned grantors relative to the change in grants coming from the unaligned ones the results suggest that partisan alignment has a sizeable positive effect on the amount of grants received by municipalities for example with majority governments at the two layers aligned municipalities receive over 40 more grants than unaligned ones

voting over income taxation abstract a major problem of the positive theory of income taxation is to explain why statutory income tax schedules in practice are marginal rate progressive while it is commonly believed that this is but a simple consequence of the fact that the number of relatively poor voters exceeds that of richer voters in general putting this contention in a voting equilibrium context is not a trivial task we do this here in the context of nonlinear taxation and attempt to provide a formal argument in support of this heuristic claim we first establish the existence of mixed strategy equilibria and identify certain cases in which marginal rate progressive taxes are chosen almost surely by the political parties unfortunately we also find that if the tax policy space is not artificially constrained the support of at least one equilibrium cannot be contained within the set of marginal rate progressive taxes

does it pay to pay performance fees empirical evidence from dutch pension funds abstract we analyze the relation between investment returns and performance fees for 218 dutch occupational pension funds with an average total of 1090 billion euro in assets under management from 2012 to 2017 our dataset is free from self reporting biases and includes total return excess return and performance fees for six major asset classes we find no statistical evidence that the returns of pension funds that pay performance fees to asset managers for active investing are significantly higher or lower than the returns of pension funds that do not pay performance fees this is true for most asset classes and robust if we correct for risk we also document that large and more specialized pension funds pay less performance fees for a given level of excess return in alternative asset classes such as hedge funds and private equity this is possibly the result of better negotiation power due to their larger scale or higher level of expertise

regulation and rent seeking prices profits and third party transfers previous research formulated the regulatory process as a contest between consumer and producer groups to determine the regulated price empirical verification of this result has been provided by numerous studies modeling the regulatory process in this fashion results in a rent seeking game in which property rights granted in the original legislation are not exclusively assigned to one group and as a result rent seeking ensues on the relevant margin this study has addressed the issue of third party interest groups extracting transfer payments from the regulatory process by introducing third party interests as an argument in the regulator s majority function it was mathematically demonstrated and empirically verified that a higher regulated price can be expected this finding suggests that other opportunities exist for an enriched theory of regulatory behavior where the political context in which the regulator functions is more precisely defined and extended

enhancing efficiency or crying over spilled milk the benefits of reform we analyze the welfare gains from the reform of existinggovernment induced distortions our results provide support forpolicies aimed at eliminating monopoly and other types of economicdistortion welfare gains over the status quo exist wheneverderegulation occurs the threat of deregulation can induce amonopoly or cartel to modify its behavior so a reform policy canprove beneficial even if reform does not actually occur optimalpolicy with commitment in fact allows a monopoly to deterderegulation the possibility of reregulation does not reverse ourresults the per period welfare gain from reform remainsundiminished

the incentive effect of fiscal equalization transfers on tax policy abstract a theoretical analysis considers the impact of a typical system of redistributive fiscal equalization transfers on the tax effort of local jurisdictions more specifically it shows that the marginal contribution rate i e the rate at which an increase in the tax base reduces those transfers might be positively associated with the local tax rate while the volume of grants received is likely to be inversely related to the tax rate these predictions are tested in an empirical analysis of the tax policy of german municipalities in order to identify the incentive effect the analysis exploits discontinuities in the rules of the fiscal equalization system as well as policy changes the empirical results support the existence of an incentive effect suggesting that the high marginal contribution rates induce the municipalities to set significantly higher business tax rates compared with a situation without fiscal equalization

growth de regulation and rent seeking in post war british economy abstractpost war political consensus about the need for government action to rectify market failure began to unravel in the 1970s and even the need for prudential control of banking and finance began to be challenged by the start of the 1980s regulatory oversight was relaxed in the belief that emerging techniques in financial engineering would render irrelevant fears of sharp periodic downturns that have historically been the consequence of lightly regulated finance the outcome of this new policy embracing the idea of unregulated markets to deliver greater prosperity is disappointing we find that the average growth rate of uk gdp and output per person employed for three decades from the start of liberalization was no greater than that in the previous three post war decades cyclical fluctuations were deeper a remarkable feature of the second period is the sharp rise in income inequality in favour of the very top earners an illusion of greater prosperity for a wider segment may have been created in

redistributing income under proportional representation although majoritarian decision rules are the norm in legislatures relatively few democracies use simple majority rule at the electoral stage adopting instead some form of multiparty proportional representation moreover aggregate data suggest that average income tax rates are higher and distributions of posttax income flatter in countries with proportional representation than in those with majority rule while there are other differences between these countries this paper explores how variations in the political system per se influence equilibrium redistributive tax rates and income distributions a three party proportional representation model is developed in which taxes are determined through legislative bargaining among successful electoral parties and the economic decision for individuals is occupational choice political economic equilibria for this model and for a two party winner take all majoritarian system are derived and compared

laffer paradox leviathan and political contest this paper considers a political contest model wherein self interested politicians seek rents from the public budget while general voters make political efforts to protest against politicians rent seeking directly for example through voting in referendums such as the passage of proposition 13 or indirectly for example through donating money to organized groups such as the national taxpayer union we show that the political contest may ironically lead to the laffer paradox that is rent seeking politicians may intend to set the tax rate higher than the revenue maximizing rate for taming leviathans political protests may not be as effective as competition among governments

fees eat diversification s lunch although diversification is often spoken of as the only free lunch in investing the authors show that it is not free and that it must be considered in light of its costs they also show that fees on diversifying asset classes are high relative to their risk adjusted diversification benefit with the more exotic asset classes carrying higher price tags because there is meaningful cross sectional variation fees need to be considered when making strategic asset allocation decisions

how do federal regulations affect consumer prices an analysis of the regressive effects of regulation this study is the first to measure the impact of federal regulations on consumer prices by combining consumer expenditure and pricing data from the bureau of labor statistics industry supply chain data from the bureau of economic analysis and industry specific regulation information from the mercatus center s regdata database we determine that regulations promote higher consumer prices and that these price increases have a disproportionately negative effect on low income households specifically we find that the poorest households spend larger proportions of their incomes on heavily regulated goods and services prone to sharp price increases while the literature explores other specific costs of regulation noting that higher consumer prices are a probable consequence of heavy regulation this study is the first to provide a thorough empirical analysis of that relationship across industries irrespective of the reasons for imposing new regulations these results demonstrate that in the aggregate the negative consequences are significant especially for the most vulnerable households

the disinterest in deregulation in the analysis of the costs of monopoly power the usual experiment is to convert a competitive industry into a monopoly and observe the consequent change in consumer s surplus modern contributions have emphasized the deadweight cost of monopoly arnold harberger 1954 and the possibility of an associated rent seeking cost of monopoly gordon tullock 1967 the harberger cost of course refers to the lost consumer s surplus triangle the tullock cost concerns the role of competition for monopoly returns taken together and assuming that the competition for monopoly rents is perfect the total cost of monopoly power is a trapezoid the rectangle of monopoly profits plus the triangle of lost consumer s surplus richard posner 1975 in this paper we approach the monopoly problem in a different spirit we compare three states of the world competition regulation and deregulation in this setting we ask what happens if a monopoly is eliminated through deregulation our analysis suggests that because under most conditions tullock costs cannot be recouped the returns to deregulation are lower than previously thought rent seeking expenditures in the past leave the economy permanently poorer even if competition is restored to the industry in contrast the returns to preventing monopoly in the first place are relatively high in our model an insight afforded by the analysis is an explanation of the persistence of laws and regulations which appear to serve no interest in this regard the example of railroad regulation in the united states comes to mind the standard explanation for such regulation is either that voters and government decision makers are ignorant of basic economics or that a small interest group like railroad firms wins rents at the expense of uninformed or economically rational consumers of rail services who do not find it cost effective to seek deregulation we offer another and perhaps more plausible explanation for the persistence of regulation and the apathy of consumers about the costs of regulation namely the costs of such regulations are for the most part the original rent seeking expenditures that lead to the regulation in the first place and these costs are sunk abolishing so called uneconomic laws does nothing to recover these losses hence there is little political support from any quarter to return to the status quo ante in fact as we shall show such a deregulatory program can easily impose more costs than it is worth there are numerous examples of this point including tariffs and quotas of all sorts subsidies to farmers the postal monopoly organized labor s antitrust exemption the licensing of doctors and so forth the traditional explanations of these monopoly rights namely ignorance of economic common sense and special interest groups are neither sufficient nor necessary since the primary costs of these laws are rent seeking expenditures which are made prior to their passage there is simply little to be gained by changing them now gains would accrue in the form of reduced harberger costs costs would be borne in passing and implementing the deregulatory program it is not that the potential gainers from deregulation are large in number diffuse heterogeneous and face high organizational costs rather they do not exist to any degree interpreted in this light efforts by political action groups such as the right to work foundation stand to be a drain on society s resources they cannot produce anything unless they prevent further monopolization through regulation we do not of course mccormick and shughart clemson university clemson sc 29631 tollison center for the study of public choice george mason university fairfax va 22030 thanks go to james buchanan rex cottle and gordon tullock for helpful comments the usual caveat applies

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

beneficiaries from federal transfers to municipalities the case of israel in this paper we have shown which variables affect the size of grants given by the government to cities in israel we have also shown that aside from demographic variables which alone account for a very large portion of the variance there is also a political residual effect where cities with mayors who are members of the in political party fared better than other cities this effect is felt mainly through the general and not the earmarked portion of the grant and was more prevalent when the likud was in power than when labor ruled

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

party politics and fiscal discipline in a federation evidence from the states of india theoretical and empirical analysis suggests that federations are prone to fiscal indiscipline because of intergovernmental bargaining over the allocation of national resources what role do political parties play in mediating this bargain if the national government is dominated by a single political party does the party discipline those states where its affiliates are in power if the national government consists of a coalition of political parties do states ruled by coalition partners bargain for higher deficits this article provides evidence on these questions from india a large federation in the developing world that serves as a valuable laboratory for this purpose the authors find that those state governments that belong to the same party as that leading the national government run higher than average deficits correspondingly states governed by rival political parties have lower deficits even if these parties are members of a coalition government at the center

the political economy of intergovernmental grants evidence from a maturing democracy we evaluate the impact of political forces in the allocation of intergovernmental grants in portugal as it matured from a young to an established democracy using a large and unexplored dataset we show that political variables condition the granting system and that their importance changed over time while tactical manipulation in the distribution of grants among municipalities seems to exist only in the early years of democracy opportunistic effects are stronger in the latter years we argue that the latter effect is due to a change in the political environment and to the electorate s lack of information on intergovernmental grants

ideology tactics and efficiency in redistributive politics we model the electoral politics of redistribution when voters and parties care about inequality in addition to their private concerns for consumption and votes respectively ideological concerns about income redistribution lead each party to adopt a general proportional income tax adjusted to appeal to the ideological leanings of high clout groups with disproportionately many swing voters which the parties also ply with pork barrel projects our results relate to director s law which says that redistributive politics favors middle classes at the expense of both rich and poor

entry deterrence and overexploitation of the fishery abstract two stackelberg game models open access and restricted entry of a poaching fishery situation are proposed only the long run noncooperative solution of managing resource stocks is assumed feasible the optimal stock under open access for poachers is shown to be lower than under restricted entry and the latter to be lower than under exclusive ownership deterrence is completely successful under open access but is partially successful only under restricted entry the game models considered are shown to be equivalent to a constrained ownership fishery control problem or its surrogate

electoral goals and center state transfers a theoretical model and empirical evidence from india we construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations these considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not a testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers we test this prediction using indian data for 14 states from 1974 75 to 1996 97 we find that a state which is both aligned and swing in the last state election is estimated to receive 16 higher transfers than a state which is unaligned and non swing

when are stable rights to rents bad stable enforceable property rights over resources normally furthers economic efficiency i argue that stable rights to government created rents and wealth transfers by contrast generate inefficiency secure rights to receive transfers increases rent seekers incentive to make political investments creating new transfers i demonstrate the point using a two period rent seeking game contestable transfers reduce the probability of establishing a transfer program and aggregate rent seeking expenditures strengthening transfer recipients rights increases the difficulty of eliminating a transfer program

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

constitutional prohibitions in a rent seeking model i extend the standard rent seeking model to allow lobbying fora constitutional prohibition on wealth transfers i examinetwo issues 1 the ability of special interests withsignificant political capacity to block constitutional change and 2 the effect of adding a constitutional stage on totallobbying expenditures defeating a prohibition on wealthtransfers is a public good for rent seekers success inconstitutional politics merely allows them to lobby for wealthtransfers the resulting collective action problem for rentseekers in constitutional politics offsets the generalinterest s free rider problems reducing the probability oftransfers and expected total lobbying expenditures compared tothe traditional rent seeking contest introduction of aconstitutional stage also reverses several comparative staticsresults from the rent seeking game an increase in the numberof rent seekers or the general interest s consumers abilityto organize increase lobbying in the rent seeking game butgenerally reduce expected lobbying in the constitutionalprohibition game

licensing and nontransferable rents traditionally restrictive licensing is assumed to create monopoly profits by restricting output and therefore to produce two kinds of social costs the deadweight loss due to reduced output and the resources devoted to rent seeking however the fact that nonsalvagable resources spent on rent seeking create their own barriers to entry has not been recognized by increasing nontransferable rents licensing prevents the least costly producers from entering and thus produces a third kind of social cost while harold demsetz 1982 dismissal of the traditional notion of entry barriers is correct when assets are transferable the idea of entry barriers is still useful when assets are nontransferable as this note shows in the case of professional licensing

on the political and fiscal determinants of income redistribution under federalism and democracy evidence from germany several recent studies suggest that transfers from central to regional governments are motivated by political considerations in this paper we examine if this is also the case for transfers from regional to central governments in the context of the german fiscal equalization system we examine the factors that contribute to differences in tax revenues across german states the evidence indicates that both fiscal incentives and political factors can explain these differences although in germany the former are more important moreover accounting for fiscal institutions has important consequences for the empirical assessment of political influences on taxation overall we find that the political affiliation of the state governor is an important factor in explaining differences in state tax revenues thus the right wing party cdu csu is effective in relaxing the tax burden at the state level in contrast partisan alignment between the state government and the federal government loses its importance once fiscal conditions enter the empirical model

the political costs of tax increases and expenditure reductions evidence from state legislative turnover this paper estimates the political costs of increasing taxes and cutting expenditures for members of a legislature it is found that both costs are individually significant but that they are not significantly different this coincides with the first order condition for maximization of the probability of reelection republican legislatures have a higher political cost for taxes thus the party s relative bias toward smaller government is founded in stronger constituent preferences against taxes not for lower spending additionally by being ideologically conservative republicans lower the political costs of taxes while by being more liberal democrats lower the cost of cutting expenditures

fiscal transfers and fiscal sustainability we examine whether the u s and german state governments pursue sustainable fiscal policies taking into account fiscal transfers using panel data techniques we investigate whether the debt to gdp ratio had a positive influence on the primary surplus bohn model we show that including excluding fiscal transfers changes the results if fiscal transfers are not included in the primary surplus the test results do not indicate that the u s and german state governments pursued sustainable fiscal policies our results also suggest that fiscal transfers were positively related to debt these findings indicate that intergovernmental transfers have implicitly subsidized debts

asset management fees and the growth of finance from 1980 to 2006 the financial services sector of the united states economy grew from 4 9 percent to 8 3 percent of gdp a substantial share of that increase was comprised of increases in the fees paid for asset management this paper examines the significant increase in asset management fees charged to both individual and institutional investors despite the economies of scale that should be realizable in the asset management business the asset weighted expense ratios charged to both individual and institutional investors have actually risen over time if we exclude index funds an innovation that has made market returns available even to small investors at close to zero expense fees have risen substantially as a percentage of assets managed one could argue that the increase in fees charged by actively managed funds could prove to be socially useful if it reflected increasing returns for investors from active management or if it was necessary to improve the efficiency of the market for investors who availed themselves of low cost passive index funds but neither of these arguments can be supported by the data actively managed funds of publicly traded securities have consistently underperformed index funds and the amount of the underperformance is well approximated by the difference in the fees charged by the two types of funds moreover it appears that there was no change in the efficiency of the market from 1980 to 2011 arbitrage opportunities to obtain excess risk adjusted returns do not appear to have been available at any time during the early part of the period passive portfolios that bought and held all the stocks in a broad based market index substantially outperformed the average active manager

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

the dynamics of lobbying a differential game this paper presents a dynamic model on lobbying the interactions between two competing lobbies who attempt to influence regulations and legislation are modelled as a differential game we consider for this game first a time consistent and then a subgame perfect equilibrium in linear markov strategies the subgame perfect equilibrium lowers considerably lobbying activity and expenses this provides a partial explanation of the puzzle that rent seeking expenses are often small compared with the prize sought

the selection of public utility commissioners a re examination of the importance of institutional setting the result of a great many studies is that it makes no difference to the rate level whether the public utility commission is appointed or elected nevertheless the typical response to an inquiry regarding the effect of appointment versus election is that a difference in resulting rate structure should exist in this paper we have reconciled these views and more carefully examined the issue of whether institutional setting does matter in the setting of regulated electricity prices we suggest that one should not necessarily expect elected pucs to behave differently than appointed ones instead different behavior should be expected from pucs that are closer to their constituents than those more isolated irrespective of whether the puc is elected or appointed the results of an empirical examination based on a large sample of utilities operating during the period of 1981 83 support this view the more narrowly defined is the consumer voter group everything else the same the lower is the rate set by the puc

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