My role in connection with the efficient rent-seeking model (Tullock 1980) is, I think, a rather ill-omened one. I began the discussion by inventing a model with an apparent paradox. The market doesn't clear even with free entry and competition. There have been a number of efforts to deal with this problem (Corcoran, 1984; I commented on it in the same issue, pp. 95-98). ( 1985) Corcoran and Karels and Higgins, Shughart, and Tollison (1985) are further efforts to solve the problem.
It is my unfortunate role, having discovered this particular intellectual swamp, to frustrate efforts to get out by pushing people back in. I first invent a difficult problem and then when people try to solve it, I say that their solutions are either wrong or at least incomplete. I should therefore say, that I do think that the work of Corcoran, Karels, Tollison, Shughart, and Higgins, has indeed made progress toward a solution even if they have not finally solved the problem.
Corcoran and Karels come close to solving the original problem provided we keep the framework of efficient rent-seeking rigid and unchanging. The problem is that there is one assumption in that initial framework which I now realize was unduly restrictive.
It is a usual practice among economists, when we observe a number of people engaging in the same kind of competitive activity to assume that they all behave the same. The reason for this is partly that they face the same problem and we would assume they reach the same conclusion, but I think even more importantly, that an assumption that they do not behave in the same manner means that you have to explain why some of them carry out one policy and some another. 1 In the particular case of efficient rent-seeking, it is in general, more profitable to violate this rule. You will make more money if you do not make the same bid as your collegues.
Before going further, I should frankly confess that I have no solution to this problem. It appears once again to be a case of the paradox of the liar. If one deviates from the pattern, he makes a profit, if all follow his example, they lose. The sensible behavior for an individual is not sensible unless the other people are doing something else. If this gives the reader a headache, I can only recommend Tylenol.