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

Dari‐Mattiacci, Giuseppe; Parisi, Francesco

doi:10.2139/ssrn.467343

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

Public Choice, Vol. 124, No. 3-4, pp. 411-422, September 2005

George Mason Law & Economics Research Paper No. 03-53

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; University of Miami, School of Law

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: Suggested Citation

Dari-Mattiacci, Giuseppe and Parisi, Francesco, Rents, Dissipation, and Lost Treasures: Rethinking Tullock's Paradox. Public Choice, Vol. 124, No. 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