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http://ssrn.com/abstract=913980
 
 

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Seeking Rents in the Shadow of Coase


Giuseppe Dari-Mattiacci


University of Amsterdam - Amsterdam Center for Law and Economics (ACLE); Tinbergen Institute

Sander Onderstal


University of Amsterdam; Tinbergen Institute

Francesco Parisi


University of Minnesota - Law School; University of Bologna

November 20, 2008

Public Choice, Forthcoming
Minnesota Legal Studies Research Paper No. 08-16
Amsterdam Center for Law & Economics Working Paper No. 2006-09

Abstract:     
In this paper, we study a two-stage rent-seeking game. In the first stage, contestants compete a-la-Tullock; in the second stage, the winner can resell the rent a-la-Coase. We consider a complete information Tullock game in which the contestants have different valuations for the rent. The analysis focuses on the ex ante effects of a secondary market on efforts, payoffs, rent-dissipation and rent-misallocation. We show that the secondary market, while correcting possible misallocations, may exacerbate rent dissipation. In some situations, the increase in rent dissipation more than offsets the allocative advantage, so that a secondary market might reduce welfare. We further show how the effect of ex post tradeability on welfare depends on the parties' bargaining power and valuations of the rent, also considering the case of endogenous bargaining power.

Number of Pages in PDF File: 37

Keywords: Rent-seeking, asymmetric rent valuations, rent-dissipation, rent-misallocation

JEL Classification: C72, D72

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Date posted: July 13, 2006 ; Last revised: March 30, 2011

Suggested Citation

Dari-Mattiacci, Giuseppe and Onderstal, Sander and Parisi, Francesco, Seeking Rents in the Shadow of Coase (November 20, 2008). Public Choice, Forthcoming; Minnesota Legal Studies Research Paper No. 08-16; Amsterdam Center for Law & Economics Working Paper No. 2006-09. Available at SSRN: http://ssrn.com/abstract=913980

Contact Information

Giuseppe Dari-Mattiacci (Contact Author)
University of Amsterdam - Amsterdam Center for Law and Economics (ACLE) ( email )
Roeterstraat 11
Amsterdam, 1018WB
Netherlands
HOME PAGE: http://darimattiacci.acle.nl
Tinbergen Institute
Roetersstraat 31
Amsterdam, 1018 WB
Netherlands
HOME PAGE: http://scholar.google.com/citations?user=AuUfjxUAAAAJ&hl=en
Sander Onderstal
University of Amsterdam ( email )
Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
Francesco Parisi
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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