Rents, Dissipation, and Lost Treasures: Rethinking Tullock's Paradox
University of Amsterdam - Amsterdam Center for Law and Economics (ACLE); Tinbergen Institute
University of Minnesota - Law School; University of Bologna
Public Choice, Vol. 124, Nos. 3-4, pp. 411-422, September 2005
George Mason Law & Economics Research Paper No. 03-53
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.
Number of Pages in PDF File: 14
Keywords: rent-seeking, rent dissipation, Tullock's paradox
JEL Classification: C72, D72
Date posted: November 12, 2003
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