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Concealed takings: Capture and rent-seeking in the Indian Sugar Industry

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  • Shyam Kamath

Abstract

This paper has attempted to test the applicability of the Public Choice approach in explaining regulation in the Indian Sugar Industry over the 1967–82 period. A test for discriminating between Public Interest and Capture theories of regulation was developed and implemented in the context of the historical pattern of controls found in the Indian Sugar Industry. The results point toward the rejection of the Public Interest theory of regulation and are consistent with the hypothesis of the capture of regulation by the regulated industry. The importance of the various interest groups and their influence on the regulation actually enacted was also revealed by the analysis. The findings are consistent with the existence of substantial rent-seeking and other D.U.P. activity (Bhagwati, 1982) in the Indian sugar sector during the post-independence period. They point toward the substantial welfare losses suffered by consumers and the economy at large as a result of the control regime that has existed in the Indian sugar sector. Removal of such controls will more than likely increase the availability of sugar at lower prices thus increasing the welfare of consumers while reducing the extent of corruption and other rent-seeking activity that the controls have generated. Copyright Kluwer Academic Publishers 1989

Suggested Citation

  • Shyam Kamath, 1989. "Concealed takings: Capture and rent-seeking in the Indian Sugar Industry," Public Choice, Springer, vol. 62(2), pages 119-138, August.
    • Handle: RePEc:kap:pubcho:v:62:y:1989:i:2:p:119-138
    DOI: 10.1007/BF00124329
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    References listed on IDEAS

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    1. Shyam Kamath, 1988. "Partially suppressed markets: Controls, rent seeking and the cost of protection in the indian sugar industry," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 124(1), pages 140-160, March.
    2. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    3. Jagdish N. Bhagwati & T. N. Srinivasan, 1975. "Foreign Trade Regimes and Economic Development: India," NBER Books, National Bureau of Economic Research, Inc, number bhag75-1, February.
    4. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    5. Richard A. Posner, 1974. "Theories of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
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    Cited by:

    1. Potters, Jan & Sloof, Randolph, 1996. "Interest groups: A survey of empirical models that try to assess their influence," European Journal of Political Economy, Elsevier, vol. 12(3), pages 403-442, November.
    2. repec:elg:eechap:15325_11 is not listed on IDEAS
    3. Nadia Fiorino & Roberto Ricciuti, 2009. "Interest Groups and Government Spending in Italy, 1876-1913," CESifo Working Paper Series 2722, CESifo.
    4. Peter T. Leeson & M. Scott King & Tate J. Fegley, 2020. "Regulating quack medicine," Public Choice, Springer, vol. 182(3), pages 273-286, March.
    5. James B. Bailey & Diana W. Thomas & Joseph R. Anderson, 2019. "Regressive effects of regulation on wages," Public Choice, Springer, vol. 180(1), pages 91-103, July.

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