In this paper, …rms engage in rent seeking in order to be assigned a governmental contract. We analyze how a change in the contract length a¤ects the …rms’ rent-seeking behavior. A longer contract leads to more rent seeking at a contract assignment stage, as the …rms value the contract higher. On the other hand, the contract has to be assigned less often, which of course leads to less rent seek...

Innovations and their adoption are the keys to growth and development. Innovations are less socially useful, but more profitable for the innovator, when they are adopted slowly and the innovator remains a monopolist. For this reason, rent-seeking, both public and private, plays an important role in determining the social usefulness of innovations. This paper examines the political economy of in...

The present value model of asset prices a la Campbell and Shiller predicts the price-rent ratio in the housing market to be stationary. The observed movements in the actual price-rent ratio, often exhibiting large and long swings in the ratio, may put into question the validity of the standard present value model. In this paper, we allow for two sources of possibly unwieldy deviations in the pr...

The city government of Munich regularly publishes a booklet called the “Mietspiegel” (MS). The MS basically contains a verbal description of an expert system. It allows to calculate the estimated fair rent for a flat. By hand, one may need a weekend to do so. With our computerized version, “The Munich Rent Advisor”, the user just fills in a form in a few minutes and the rent is calculated immed...

We analyze the distributional effects of rent-seeking via financial sector in a model calibrated to US data. Rent-seeking implies misallocation resources that increases wealth inequality among non-rent-seekers and for whole economy. A deterioration institutional quality implying more leads welfare losses non-rent-seekers, especially those with higher earnings initial wealth, because they are mo...

We extend the protection for sale framework by modelling non tariff barriers. Explicitly introducing partial rent capturing leads to a testable specification that bridges the gap between the theoretical Grossman and Helpman (1994) model and its empirical implementation, where coverage ratios have been used to measure protection. Our econometric analysis supports the augmented specification and ...

Conventional wisdom suggests that CEO membership of the compensation committee is an open invitation to rent extraction by self-serving executives. However, using data from New Zealand – where CEO compensation committee membership is relatively common – we find that annual pay increments for CEOs with this apparent advantage averaged six percentage points less than those enjoyed by other CEOs d...

Corruption often creates a “briber’s dilemma”: each of the “clients” competing for a rent allocated by a government official has an incentive to pay bribes to try to obtain preferential treatment, but they would all be better off if they could mutually commit not to pay bribes. This paper uses a model of linked games to show how informal relationships among the clients may enable them to enforc...

We study the rent-seeking phenomenon using a simple, static general equilibrium model. The economy consists of two sectors, both employing constant returns-to-scale technology with labor as its sole input. One sectors is monopoly, where continuum agents compete for share monopoly profits (i.e. rent). Agents are heterogeneous in productivity and ability: they face choice between engaging (produc...

In an experiment on sequential rent seeking, we find that the theoretically predicted first-mover advantage does not exist empirically. Rather, a second-mover advantage can be observed. Though the subgame perfect equilibrium can not prevail in experiment, individual behavior is highly reasonable nevertheless, such that subjects appear to play a reduced form of the original game. We also observe...