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The Reformer’s Dilemma

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  • William F. Shughart II

    (University of Mississippi)

Abstract

By redirecting scarce resources away from socially productive employment, the pursuit of wealth transfers by special interest groups converts those transfers into social costs. In the limit, the available rents are fully dissipated and the welfare loss associated with rent seeking equals the sum of the value of the rent rectangle and the deadweight loss triangle. This article shows that by eliciting expenditures to defend existing rents, attempts to reform the rent-seeking society cannot lower the social cost bill; they can only add to it. Hence, the only way to avoid the reformer's dilemma is to not grant monopoly rights in the first place.

Suggested Citation

  • William F. Shughart II, 1999. "The Reformer’s Dilemma," Public Finance Review, , vol. 27(5), pages 561-565, September.
    • Handle: RePEc:sae:pubfin:v:27:y:1999:i:5:p:561-565
    DOI: 10.1177/109114219902700506
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    References listed on IDEAS

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    1. Gordon Tullock, 1975. "The Transitional Gains Trap," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 671-678, Autumn.
    2. Landes, William M & Posner, Richard A, 1975. "The Independent Judiciary in an Interest-Group Perspective," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 875-901, December.
    3. Douglas, George W & Miller, James C, III, 1974. "Quality Competition, Industry Equilibrium, and Efficiency in the Price-Constrained Airline Market," American Economic Review, American Economic Association, vol. 64(4), pages 657-669, September.
    4. McCormick, Robert E & Shughart, William F, II & Tollison, Robert D, 1984. "The Disinterest in Deregulation," American Economic Review, American Economic Association, vol. 74(5), pages 1075-1079, December.
    5. William Corcoran, 1984. "Long-run equilibrium and total expenditures in rent-seeking," Public Choice, Springer, vol. 43(1), pages 89-94, January.
    6. Richard A. Posner, 1975. "The Social Costs of Monopoly and Regulation," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 45-65, Springer.
    7. Mueller,Dennis C. (ed.), 1997. "Perspectives on Public Choice," Cambridge Books, Cambridge University Press, number 9780521553773, January.
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    Cited by:

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