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Rent Seeking and the Provision of Public Goods

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  • Gradstein, Mark

Abstract

In this short paper I adopt the public choice school paradigm of modeling a government in order to compare its performance with that of the market in the standard model of the provision of public goods. Private provision is represented by the Cournot-Nash equilibrium in individual contributions. Public provision incorporates rent seeking, whereby some of the aspects of the allocation are determined indirectly by influence activities of the interested parties. Thus, both allocation procedures yield inefficiency, and the question is which procedure results in a greater amount of inefficiency: private provision with its free riding incentives, or public provision with its rent seeking incentives. The results indicate that public provision may well be preferred to private provision of public goods. Thus, superiority of private provision is not guaranteed even in the case of a non-benevolent government. Copyright 1993 by Royal Economic Society.

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  • Gradstein, Mark, 1993. "Rent Seeking and the Provision of Public Goods," Economic Journal, Royal Economic Society, vol. 103(420), pages 1236-1243, September.
    • Handle: RePEc:ecj:econjl:v:103:y:1993:i:420:p:1236-43
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    Cited by:

    1. Eric Langlais & Marie Obidzinski, 2013. "Elected vs appointed public law enforcers," Working Papers 2013-06, CRESE.
    2. Elie Appelbaum & Eliakim Katz, 1986. "Transfer seeking and avoidance: On the full social costs of rent seeking," Public Choice, Springer, vol. 48(2), pages 175-181, January.
    3. Nti, Kofi O., 1998. "Effort and performance in group contests," European Journal of Political Economy, Elsevier, vol. 14(4), pages 769-781, November.
    4. Epstein, Gil S. & Nitzan, Shmuel, 2004. "Strategic restraint in contests," European Economic Review, Elsevier, vol. 48(1), pages 201-210, February.
    5. Kahana, Nava & Nitzan, Shmuel, 1999. "Uncertain preassigned non-contestable and contestable rents," European Economic Review, Elsevier, vol. 43(9), pages 1705-1721, October.
    6. Ian A. MacKenzie, 2009. "Controlling externalities in the presence of rent seeking," CER-ETH Economics working paper series 09/111, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    7. Ihori, Toshihiro, 1996. "International public goods and contribution productivity differentials," Journal of Public Economics, Elsevier, vol. 61(1), pages 139-154, July.
    8. Euan Fleming, 1998. "Rent-seeking in rural development projects: its potential causes and measures to reduce its costs," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(3), pages 277-299.
    9. Farhad Nili & Gabriel Talmain, "undated". "Rent-seeking, Occupational Choice and Oil Boom," Discussion Papers 01/11, Department of Economics, University of York.
    10. Neugart, Michael & Richiardi, Matteo G., 2013. "Sequential teamwork in competitive environments: Theory and evidence from swimming data," European Economic Review, Elsevier, vol. 63(C), pages 186-205.
    11. Liston-Heyes, Catherine, 2001. "Setting the Stakes in Environmental Contests," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 1-12, January.
    12. Pavel Ciaian & Jan Pokrivcak, 2005. "Why Some Sectors of Transition Economies are less Reformed than Others? The Case of Research and Education," EERI Research Paper Series EERI_RP_2005_02, Economics and Econometrics Research Institute (EERI), Brussels.
    13. Hodler, Roland, 2009. "Industrial policy in an imperfect world," Journal of Development Economics, Elsevier, vol. 90(1), pages 85-93, September.
    14. Konrad, Kai A., 2007. "Strategy in contests: an introduction [Strategie in Turnieren – eine Einführung]," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, WZB Berlin Social Science Center.

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