Rent-Seeking with Politically Contestable Rights to Tariff-Rate Import Quotas

17 Pages Posted: 2 Nov 2005

See all articles by Jana Hranaiova

Jana Hranaiova

Public Company Oversight Board

Harry de Gorter

Cornell University - School of Applied Economics and Management

Abstract

This paper analyzes rent-seeking for agricultural import quotas and the associated waste of resources when politically contestable licenses are allocated to either or both importers and exporters. In a two-stage simultaneous contest where firms seek rent for licenses and then bargain over the import/export price, it is shown that (1) rents are not dissipated completely because of uncertainty in allocation of "rights," (2) the dissipation ratio increases if the country with a more competitive contest increases the probability of establishing licenses, (3) rent-seeking may cause the market structure to change, (4) less rent is dissipated in the case of pre-existing market power, and (5) allocation of multiple licenses decreases rent-seeking outlays.

Suggested Citation

Hranaiova, Jana and de Gorter, Harry, Rent-Seeking with Politically Contestable Rights to Tariff-Rate Import Quotas. Review of International Economics, Vol. 13, No. 4, pp. 805-821, September 2005. Available at SSRN: https://ssrn.com/abstract=806327

Jana Hranaiova (Contact Author)

Public Company Oversight Board ( email )

1666 Kase Street
Washington, DC 20006
United States

Harry De Gorter

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States
607-255-8076 (Phone)

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