Abstract
The lure of excess profits or rents associated with monopoly power gives rise to expenditures to obtain these rents. Competitive rent-seeking behavior is recognized as a factor which must be included among the wastes associated with monopoly power (Tullock, 1967; Posner, 1975).1 The expenditures are aimed at transferring wealth rather than its creation, and the use of resources to obtain this transfer is a loss to society. How important rent-seeking is as a part of the total monopolistic waste hinges on the size of the total expenditures induced by a given level of excess profits.
Thanks are due to Gordon Karels and several anonymous referees for valuable comments leading to substantial improvements in this paper.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
Competition as used here refers to rivalrous behavior which implies that a degree of influence can be exerted by each participant in determining the outcome; this is markedly different from perfect competition, where each is powerless to affect the price (see McNulty, 1968).
See, for example, Varian (1978: 60).
The variation of profits with r can be determined by taking the derivative, d/dr (P(n +r—nr)/n 2 ). This result in P(1-n)/n 2,which indicates a negative relationship between profits and r,the marginal cost, for n/1.
More exactly, it involves the time for the number of players necessary to obtain equilibrium to be informed.
This would occur where an innovator could not capture the total consumer’s surplus of a newly introduced product.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2001 Springer Science+Business Media New York
About this chapter
Cite this chapter
Corcoran, W.J. (2001). Long-run equilibrium and total expenditures in rent-seeking. In: Lockard, A.A., Tullock, G. (eds) Efficient Rent-Seeking. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-5055-3_3
Download citation
DOI: https://doi.org/10.1007/978-1-4757-5055-3_3
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4419-4866-3
Online ISBN: 978-1-4757-5055-3
eBook Packages: Springer Book Archive