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Rent Seeking and Rent Setting with Asymmetric Effectiveness of Lobbying

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  • Kohli, Inderjit
  • Singh, Nirvikar

Abstract

This paper provides a more general model of the determination of rent-seeking costs by combining the following features: endogenous rent determination, asymmetric effectiveness of contending agents in their lobbying efforts, and multiple periods. In doing so, the paper generalizes some aspects of the work of Applebaum and Katz (1987), Rogerson (1982), Leininger (1992), and Kohli (1992). Some results obtained are: (1) in the short run, when the regulator's salary is higher than in an alternative occupation, both the per unit cost of rentseeking and the total rent set by regulator are highest for the same value of the relative effectiveness parameter; (2) in the long run, an increase in the effectiveness parameter leads to a reduction in the social costs of rent seeking; and (3) in a repeated game, the equilibrium rent is lower the higher is the regulator's discount factor. Copyright 1999 by Kluwer Academic Publishers

Suggested Citation

  • Kohli, Inderjit & Singh, Nirvikar, 1999. "Rent Seeking and Rent Setting with Asymmetric Effectiveness of Lobbying," Public Choice, Springer, vol. 99(3-4), pages 275-298, June.
    • Handle: RePEc:kap:pubcho:v:99:y:1999:i:3-4:p:275-98
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    Cited by:

    1. Amihai Glazer & Stef Proost, 2020. "Benefits to the majority from universal service," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(2), pages 391-408, April.
    2. Singh, Nirvikar, 2015. "Punjab’s Agricultural Innovation Challenge," Santa Cruz Department of Economics, Working Paper Series qt4716p3vr, Department of Economics, UC Santa Cruz.
    3. E. Feess & Gerd Muehlheusser & M. Walzl, 2008. "Unfair contests," Journal of Economics, Springer, vol. 93(3), pages 267-291, April.
      • Feess, E. & Muehlheusser, G. & Walzl, M., 2004. "Unfair contests," Research Memorandum 048, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Matthew D. Mitchell, 2019. "Uncontestable favoritism," Public Choice, Springer, vol. 181(1), pages 167-190, October.
    5. Grigorieva, E. & Herings, P.J.J. & Müller, R.J. & Vermeulen, A.J., 2004. "The communication complexity of private value single item auctions," Research Memorandum 050, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    6. Epstein, Gil S. & Nitzan, Shmuel, 2004. "Strategic restraint in contests," European Economic Review, Elsevier, vol. 48(1), pages 201-210, February.
    7. Marco Runkel, 2003. "Optimal Contest Design when the Designer’s Payoff Depends on Competitive Balance," CESifo Working Paper Series 1009, CESifo.
    8. Klaus Abbink & David Masclet & Daniel Mirza, 2018. "Inequality and inter-group conflicts: experimental evidence," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 50(3), pages 387-423, March.
    9. Giuseppe Dari-Mattiacci & Eric Langlais & Bruno Lovat & Francesco Parisi, 2013. "Asymmetries in Rent-Seeking," EconomiX Working Papers 2013-5, University of Paris Nanterre, EconomiX.
    10. Marco Runkel, 2006. "Optimal contest design, closeness and the contest success function," Public Choice, Springer, vol. 129(1), pages 217-231, October.
    11. Alexander M. Yarkin, 2014. "Endogenous Property Rights, Conflict Intensity And Inequality In Asymmetric Rent-Seeking Contest," HSE Working papers WP BRP 72/EC/2014, National Research University Higher School of Economics.
    12. repec:elg:eechap:15325_5 is not listed on IDEAS
    13. Christoph Engel & Klaus Heine, 2017. "The dark side of price cap regulation: a laboratory experiment," Public Choice, Springer, vol. 173(1), pages 217-240, October.
    14. Bjorvatn, Kjetil & Selvik, Kjetil, 2008. "Destructive Competition: Factionalism and Rent-Seeking in Iran," World Development, Elsevier, vol. 36(11), pages 2314-2324, November.
    15. Gil Epstein & Igal Milchtaich & Shmuel Nitzan & Mordechai Schwarz, 2007. "Ambiguous political power and contest efforts," Public Choice, Springer, vol. 132(1), pages 113-123, July.

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