Long-run Efficiency of the Rent-seeking Expenditures

Kim, Haeng-Bum

Whether or not the rent-seeking cost will fully dissipate the rent has formed an intellectual quagmire since the seminal study of efficient rent-seeking by Tullock(1980a). Different conclusions were derived from different studies. I thought one of the important variables for this inconsistent results is the time horizon. Whether it's long-term or short-term study might have caused different results and different prescriptions. The comparison of both studies is critical. Tullock(1980a)'s efficient rent seeking model was reviewed in terms of long-term equilibrium. Here I compared the results of the both Tullock's model and Corcoran & Karels(1988)'s long-term model. Then I proposed some prescriptive alternatives to decrease rent-seeking expenditure. The size of (parameter of marginal cost of rent-seeking) and the type of competition are critical to the full rent dissipation. Both the case of <1 and ≥1 were reviewed. Two types of competition were analyzed : the ordinary competition (latent entrants enter the rent seeking market only when they see positive payoffs) and the hardball competition(latent entrants force the incumbents to accept them by threatening to incur potential loss for all of them). From the implications of the study, some prescriptive alternatives were suggested to decrease rent seeking cost : limitation of excessive rent competition, limiting of the development of hardball competition, raising the marginal cost of rent seeking, imposing high transaction costs to rent seeking activities, increasing opportunity cost discount rate of return.

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* 2021년 이후 발행 논문의 참고문헌은 현재 구축 중입니다.

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