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Some Implications of Corporate Taxation for Rent-Seeking Activity

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  • Katz, Eliakim
  • Rosenberg, Jacob

Abstract

In this paper we show that corporate taxes are likely to have considerable implications for rent-seeking activity. We find that corporate taxation tends to significantly reduce rent-seeking, and that it favors rent-seeking by established firms and discriminates against new and zero profit firms. Indeed, we show that corporate tax regulations may completely block rent-seeking by new corporations, and that rent-seeking competitions may be characterized by an equilibrium that features a small number of profitable and well-established firms. Tax regulations may therefore impart an oligopolistic tendency to rent-seeking markets. Moreover, our results may have significant implications for the effects of corporate taxes on patent races, tournaments, and other first-past-the-post competitions. Copyright 2000 by Kluwer Academic Publishers

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  • Katz, Eliakim & Rosenberg, Jacob, 2000. "Some Implications of Corporate Taxation for Rent-Seeking Activity," Public Choice, Springer, vol. 102(1-2), pages 151-164, January.
    • Handle: RePEc:kap:pubcho:v:102:y:2000:i:1-2:p:151-64
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    Cited by:

    1. 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.

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