Persistent Rent Extraction

Posted: 11 Jun 2011

See all articles by Leif Helland

Leif Helland

BI Norwegian Business School - Department of Economics

Rune J. Sørensen

BI Norwegian Business School

Date Written: April 30, 2009

Abstract

Representative democracy does not necessarily eliminate political corruption. Existing models explain the survival of rent-taking politicians by ideological divisions in the electorate and/or informational asymmetries. The current paper demonstrate that rent extraction can persist even if voters are fully informed and ideologically homogenous. We show that in such an environment, voters may gain by persistently reelecting a rent-taker that limits his rent extraction. Such an equilibrium occurs when voters and politicians do not discount the future too heavily, and the share of honest candidates is relatively small.

Keywords: Electoral agency, Game Theory

JEL Classification: C72, D72

Suggested Citation

Helland, Leif and Sørensen, Rune J., Persistent Rent Extraction (April 30, 2009). Public Choice, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1397130

Leif Helland (Contact Author)

BI Norwegian Business School - Department of Economics ( email )

Nydalsveien 37
Oslo, 0484
Norway

Rune J. Sørensen

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

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