Rents, Dissipation, and Lost Treasures: Rethinking Tullock's Paradox

14 Pages Posted: 12 Nov 2003

See all articles by Giuseppe Dari‐Mattiacci

Giuseppe Dari‐Mattiacci

University of Amsterdam; Tinbergen Institute; European Corporate Governance Institute (ECGI)

Francesco Parisi

University of Minnesota - Law School; University of Bologna

Abstract

In this paper we revisit Tullock's (1980) paradox and consider a rent-seeking game in which parties face increasing returns to effort. We allow parties to randomize their strategies and give them an exit option. Given the mixed participation strategies of the parties, valuable rents may occasionally remain unexploited. We consider such a lost-treasure effect as an additional cost of rent-seeking and examine how the expected value of such a lost rent varies with changes in the parameters of the problem.

Keywords: rent-seeking, rent dissipation, Tullock's paradox

JEL Classification: C72, D72

Suggested Citation

Dari-Mattiacci, Giuseppe and Parisi, Francesco, Rents, Dissipation, and Lost Treasures: Rethinking Tullock's Paradox. Public Choice, Vol. 124, Nos. 3-4, pp. 411-422, September 2005, George Mason Law & Economics Research Paper No. 03-53, Available at SSRN: https://ssrn.com/abstract=467343 or http://dx.doi.org/10.2139/ssrn.467343

Giuseppe Dari-Mattiacci

University of Amsterdam ( email )

Postbus 15654
1001 ND
Amsterdam, Noord-Holland 1001 ND
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Francesco Parisi (Contact Author)

University of Minnesota - Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

University of Bologna ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

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