Corruption, Rent Seeking and Multiple Equilibria
We look at how corruption and rent seeking can trap economies in a low growth equilibrium based in part on "Why is Rent Seeking So Costly Growth" a paper by Murphy
We look at how corruption and rent seeking can trap economies in a low growth equilibrium based in part on "Why is Rent Seeking So Costly Growth" a paper by Murphy, Shleifer and Vishny.
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Why is the initial Rent Seeking Return flat and independent of the Producer return? A lot of Rent seeking activities seem to be more of a % cut of producer surplus rather than a flat fee. Which would result in Rent Seeker Returns being related to producer returns?
We are assuming competition in rent seeking and constant returns to scale--think of rent seekers as stealing apples from a farmer and each rent seeker takes one basket of apples. Note that the rent seeking return is independent of the producer return but the quantity of potential rent seekers is not. Nothing wrong with your assumptions either - it would be a slightly more complicated model but the conclusions we focus on wouldn't change much.
Can you give some comprehensive exaples for legal rent seeking for a product like coffee? I try to understand how the number of rent seekers can steadily increase as I can only imagine taxation and trading rights as legal forms of rent seeking.
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