Where are the Rent Seekers?

33 Pages Posted: 22 Apr 2016

See all articles by Arye L. Hillman

Arye L. Hillman

Bar-Ilan University - Department of Economics; Centre for Economic Policy Research (CEPR)

Heinrich W. Ursprung

University of Konstanz; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 6, 2016

Abstract

In a remarkably simple and yet in one of the most original and insightful observations of 20th century economics, Gordon Tullock observed that there are efficiency losses when public policies and political behavior create contestable rents. Tullock also observed that social losses from contesting rents appeared smaller than might be expected. The question is then raised ‘where are the rent seekers?’ Tullock proposed that rent seeking was restrained by political accountability and ‘free-riding’ incentives in interest groups. We affirm Tullock’s explanations, which can be extended to locate rent seekers under different political institutions. We compare Tullock with Gary Becker, who focused on dead weight losses from redistribution and concluded, in contrast to Tullock, that political redistribution is efficient. The comparison highlights the significance of the recognition of rent seeking. By excluding rent-seeking losses from the social costs of redistribution, Becker could arrive at a conclusion more favorable than Tullock to an ideology that sees merit in extensive redistribution.

Keywords: rent seeking, rent creation, deadweight losses, income distribution, interest groups, contest models, Gordon Tullock, Gary Becker, Donald Wittman

JEL Classification: H110

Suggested Citation

Hillman, Arye L. and Ursprung, Heinrich, Where are the Rent Seekers? (April 6, 2016). CESifo Working Paper Series No. 5833. Available at SSRN: https://ssrn.com/abstract=2768045

Arye L. Hillman

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+97 29 774 6424 (Phone)
+97 29 771 5628 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Heinrich Ursprung (Contact Author)

University of Konstanz ( email )

Konstanz, D-78457
Germany
+49 7531 88 3713 (Phone)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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