IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/5893.html
   My bibliography  Save this paper

A Theory of Rent Seeking with Informational Foundations

Author

Listed:
  • Lagerlof, Johan

Abstract

I develop a model of rent seeking with informational foundations and an arbitrary number of rent seekers, and I compare the results with Tullock's (1980) classic model where the influence activities are "black-boxed." Given the microfoundations, the welfare consequences of rent seeking can be studied. In particular, I show that competition among rent seekers can be socially beneficial, since the additional information that the decision maker gets access to makes the increase in rent-seeking expenditures worthwhile. However, the analysis also highlights a logic that, under natural parameter assumptions, makes the rent seekers spend more resources on rent seeking than is in society's interest, which is consistent with the spirit of the rent-seeking literature.

Suggested Citation

  • Lagerlof, Johan, 2006. "A Theory of Rent Seeking with Informational Foundations," CEPR Discussion Papers 5893, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5893
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP5893
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:bla:kyklos:v:28:y:1975:i:4:p:745-62 is not listed on IDEAS
    2. Lagerlof, Johan N.M. & Heidhues, Paul, 2005. "On the desirability of an efficiency defense in merger control," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 803-827, December.
    3. Jean-Jacques Laffont & Jean Tirole, 1991. "The Politics of Government Decision-Making: A Theory of Regulatory Capture," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1089-1127.
    4. Lohmann, Susanne, 1994. "Information Aggregation through Costly Political Action," American Economic Review, American Economic Association, vol. 84(3), pages 518-530, June.
    5. Gordon Tullock, 2008. "On the efficient organization of trials," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 361-378, Springer.
    6. Posner, Richard A, 1975. "The Social Costs of Monopoly and Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 807-827, August.
    7. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
    8. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753, September.
    9. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    10. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
    11. Morten Bennedsen & Sven E. Feldmann, 2002. "Lobbying Legislatures," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 919-948, August.
    12. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    13. Tirole, Jean, 1986. "Procurement and Renegotiation," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 235-259, April.
    14. Lars Frisell & Johan N. M. Lagerlöf, 2007. "A Model of Reputation in Cheap Talk," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(1), pages 49-70, March.
    15. Austen-Smith, David, 1995. "Campaign Contributions and Access," American Political Science Review, Cambridge University Press, vol. 89(3), pages 566-581, September.
    16. Nitzan, Shmuel, 1994. "Modelling rent-seeking contests," European Journal of Political Economy, Elsevier, vol. 10(1), pages 41-60, May.
    17. Potters, Jan & van Winden, Frans, 1992. "Lobbying and Asymmetric Information," Public Choice, Springer, vol. 74(3), pages 269-292, October.
    18. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stergios Skaperdas & Samarth Vaidya, 2012. "Persuasion as a contest," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(2), pages 465-486, October.
    2. Etienne Farvaque & Gael Lagadec, 2009. "Electoral Control when Policies are for Sale," CESifo Working Paper Series 2522, CESifo.
    3. Martin Gregor, 2011. "Corporate lobbying: A review of the recent literature," Working Papers IES 2011/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2011.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Groll, Thomas & Ellis, Christopher J., 2014. "A simple model of the commercial lobbying industry," European Economic Review, Elsevier, vol. 70(C), pages 299-316.
    2. Konstantinos Protopappas, 2022. "Optimal lobbying pricing," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(1), pages 37-61, July.
    3. Drew Fudenberg, 2015. "Tirole's Industrial Regulation and Organization Legacy in Economics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(3), pages 771-800, July.
    4. Committee, Nobel Prize, 2014. "Market power and regulation (scientific background)," Nobel Prize in Economics documents 2014-2, Nobel Prize Committee.
    5. Zara Sharif & Otto H. Swank, 2012. "Do More Powerful Interest Groups have a Disproportionate Influence on Policy?," Tinbergen Institute Discussion Papers 12-134/VII, Tinbergen Institute.
    6. DAHM, Matthias & PORTEIRO, Nicolas, 2003. "The political economy of interest groups: pressure and information," LIDAM Discussion Papers CORE 2003057, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Lagerlof, Johan & Frisell, Lars, 2004. "Lobbying, Information Transmission and Unequal Representation," CEPR Discussion Papers 4313, C.E.P.R. Discussion Papers.
    8. Zara Sharif & Otto H. Swank, 2019. "Do More Powerful Interest Groups Have a Disproportionate Influence on Policy?," De Economist, Springer, vol. 167(2), pages 127-143, June.
    9. Dal Bó, Ernesto & Dal Bó, Pedro & Di Tella, Rafael, 2006. "“Plata o Plomo?”: Bribe and Punishment in a Theory of Political Influence," American Political Science Review, Cambridge University Press, vol. 100(1), pages 41-53, February.
    10. Aleksandar Vasilev, 2013. "On the cost of rent-seeking by government bureaucrats in a Real-Business-Cycle framework," Working Papers 2013_20, Business School - Economics, University of Glasgow.
    11. P. Hägg, 1997. "Theories on the Economics of Regulation: A Survey of the Literature from a European Perspective," European Journal of Law and Economics, Springer, vol. 4(4), pages 337-370, December.
    12. Reuben E., 2002. "Interest groups and politics: The need to concentrate on group formation," Public Economics 0212001, University Library of Munich, Germany.
    13. Dellis, Arnaud, 2023. "Legislative informational lobbying," Journal of Economic Theory, Elsevier, vol. 208(C).
    14. Aidt, Toke S. & Hillman, Arye L., 2008. "Enduring rents," European Journal of Political Economy, Elsevier, vol. 24(3), pages 545-553, September.
    15. Arnaud Dellis & Mandar Oak, 2016. "Overlobbying and Pareto-improving Agenda Constraint," School of Economics and Public Policy Working Papers 2016-05, University of Adelaide, School of Economics and Public Policy.
    16. Christopher S. Cotton & Arnaud Déllis, 2016. "Informational Lobbying and Agenda Distortion," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(4), pages 762-793.
    17. Lagerlof, Johan, 1997. "Lobbying, information, and private and social welfare," European Journal of Political Economy, Elsevier, vol. 13(3), pages 615-637, September.
    18. Andrea Prat, 2002. "Campaign Advertising and Voter Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 999-1017.
    19. Cheikbossian, Guillaume, 2008. "Heterogeneous groups and rent-seeking for public goods," European Journal of Political Economy, Elsevier, vol. 24(1), pages 133-150, March.
    20. Thomas Groll & Anja Prummer, 2016. "Whom to Lobby? Targeting in Political Networks," Working Papers 808, Queen Mary University of London, School of Economics and Finance.

    More about this item

    Keywords

    Rent seeking; Competition; Information acquisition; Disclosure; Welfare;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:5893. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.