This activity is known as rent seeking. The potential victim, meanwhile, aware of the possibility of theft, will invest in locks, and alarms to prevent the transfer of wealth, i.e., rent avoidance. The fact that both parties have employed resources unproductively implies a social loss to society, regardless of the outcome. From a societal point of view, it would be much more beneficial if the threat of theft was absent and both parties invested in the production of goods merely for society's consumption. The net result is the inefficient use of resources by society, and therefore a location off the production possibilities frontier.
Any cost incurred in the competition to obtain or maintain a monopoly is a cost of rent seeking.
Types and magnitudes of costs will vary depending on the type of monopoly. Typically, monopolists will incur both strategic and administrative expenses. Both activities lead to the dissipation of monopoly rents. Furthermore, a monopolist may invest in capital as a signal or precommitment to potential entrants of his long-term interest in the industry. Such investment may be necessary to make the threat to fight potential entrants credible.