TY - JOUR
T1 - RENT DISSIPATION AND THE SOCIAL COST OF PRICE POLICY
AU - Coggins, Jay S.
PY - 1995/7
Y1 - 1995/7
N2 - This paper uses a general equilibrium‐based exchange economy model to examine rent seeking for a price policy. Opposing interests spend resources to influence the government's choice of a price vector. Rents, the willingness to pay for the policy, are determined endogenously from the Nash equilibirum of a non‐cooperative game. Numerical simulations explore the degree to which rents are dissipated by wasteful rent seeking. It is found that dissipation, measured as the ratio of rent‐seeking costs to rents garnered, can grow without limit, and is greatest when opponents are evenly matched. Dissipation is smallest with widely disparate groups, a result that might help explain the underdissipation that seems to occur in many industries.
AB - This paper uses a general equilibrium‐based exchange economy model to examine rent seeking for a price policy. Opposing interests spend resources to influence the government's choice of a price vector. Rents, the willingness to pay for the policy, are determined endogenously from the Nash equilibirum of a non‐cooperative game. Numerical simulations explore the degree to which rents are dissipated by wasteful rent seeking. It is found that dissipation, measured as the ratio of rent‐seeking costs to rents garnered, can grow without limit, and is greatest when opponents are evenly matched. Dissipation is smallest with widely disparate groups, a result that might help explain the underdissipation that seems to occur in many industries.
UR - http://www.scopus.com/inward/record.url?scp=84984486122&partnerID=8YFLogxK
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U2 - 10.1111/j.1468-0343.1995.tb00108.x
DO - 10.1111/j.1468-0343.1995.tb00108.x
M3 - Article
AN - SCOPUS:84984486122
SN - 0954-1985
VL - 7
SP - 147
EP - 166
JO - Economics & Politics
JF - Economics & Politics
IS - 2
ER -