Some empirical evidence on rent-seeking

✍ Scribed by R. L. Beck; J. M. Connolly

• Book ID: 104644095
• Publisher: Springer US
• Year: 1996
• Tongue: English
• Weight: 839 KB
• Volume: 87
• Category: Article
• ISSN: 0048-5829
• DOI: 10.1007/bf00151727

✦ Synopsis

We tested for the capture of net gains by winners in rent-seeking competitions, using the most prominent announcements of government favors in the Canadian economy over a twelveyear period. Stockholders' returns were not significantly different from zero. One possible explanation is that government assists firms only when assistance creates political gains. Refusing to transfer economic rents to firms maximmizes the resources available to serve political purposes. This kind of behavior by government officials would imply that government has market power, which is consistent with several well-known theories of government.