An Estimate of Resource Expenditures on Transfer Activity in the United States

Laband, David N.; Sophocleus, John P.

doi:10.2307/2118370

Cited by 79 publications

(27 citation statements)

References 11 publications

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“…In such a case the sum of the solutions to the first-order conditions exceeds the value of the prize Q; there is the false appearance of an over dissipation of rents. Tullock (1980Tullock ( , 1984Tullock ( , 1985Tullock ( , 1987Tullock ( , 1989 devoted considerable attention to the case of over dissipation because of the induced excess social waste; see Dougan (1991) for a critical comment, and Laband and Sophocleus (1992) for estimates of the resource expenditures. In Tullock (1984) it was acknowledged that over dissipation may be due to a failure of the second-order conditions 2 In the vernacular of the game theory, over dissipation is not part of a Nash equilibrium.…”

Section: U2(ylx ) = [1 -~(Xy)]q -Ymentioning

confidence: 99%

The solution to the Tullock rent-seeking game when R > 2: Mixed-strategy equilibria and mean dissipation rates

Baye

Kovenock

Vries

2001

Efficient Rent-Seeking

116

118

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Abstract. In Tullock's rent-seeking model, the probability a player wins the game depends on expenditures raised to the power R. We show that a symmetric mixed-strategy Nash equilibrium, exists when R > 2, and that overdissipation of rents does not arise in any Nash equilibrium. We derive a tight lower bound on the level of rent dissipation that arises in a symmetric equilibrium when the strategy space is discrete, and show that full rent dissipation occurs when the strategy space is continuous. Our results are shown to be consistent with recent experimental evidence on the dissipation of rents.

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Section: U2(ylx ) = [1 -~(Xy)]q -Ymentioning

confidence: 99%

The solution to the Tullock rent-seeking game when R > 2: Mixed-strategy equilibria and mean dissipation rates

Baye

Kovenock

Vries

2001

Efficient Rent-Seeking

116

118

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“…A very different type of market failure encourages rent-seeking behavior, and has been analyzed by 17 See, for example, Laband and Sophocleus (1992), who estimate annual U.S. expenditures on rent-seeking to be approximately $1 trillion in 1985. To be sure, this figure includes estimated costs of crime prevention, legal disputes, military expenditures, costs associated with lobbying, and imputed costs of obtaining government transfers -as well as more standard items such as expenditures to obtain monopoly positions and import licenses.…”

Section: Theories Of Imperfect and Inefficient Economiesmentioning

confidence: 99%

Three Sides of Harberger Triangles

Hines¹

1998

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Introduction.Prevailing economic wisdom is highly critical of injudicious tax policies or government regulations, uncorrected externalities, unchecked monopolistic practices, and various other market failures. When economists are challenged to quantify the economic costs of associated price distortions, it is standard practice --and has been since the 1960s --to use a small number of assumptions and selected elasticities to estimate areas of the relevant "Harberger triangles." This simple and straightforward exercise has numerous applications and the virtue of producing answers rather than conjectures.Harberger triangles come in many shapes and sizes. Figure 1 offers an illustration of such a triangle for the simple case of an excise tax. Point A of Figure 1, at which the demand and supply schedules intersect, denotes market equilibrium in the absence of the tax, with quantity q 1 transacted at price p 1 . Introduction of an excise tax at rate J, payable by firms selling the commodity, shifts the supply schedule upward by J. At the new market equilibrium, firms sell q 2 units of the commodity at a market price of p 2 , receiving (after tax) p 3 = (p 2 -J).Market equilibrium at point A in Figure 1 has the feature that marginal consumption benefits equal marginal production costs. The excise tax drives a wedge between marginal benefits and marginal costs. At consumption level q 2 , consumers are willing to pay any amount up to p 2 for additional units of the good, and suppliers would readily provide additional units of the good for any price of p 3 or greater --but these additional transactions do not take place, due to the effect of the tax wedge. The loss associated with the foregone transaction of a single unit at q 2 is: p 2 -p 3 = J. Summing differences between the prices that consumers would pay, and the prices at which suppliers would provide goods, for all units between q 2 and q 1 , indicates the welfare loss due to the excise tax, and is represented by the shaded "Harberger triangle" in Figure 1. In this case, the height of the Harberger triangle is the tax rate, its base is the amount by which sales fall in reaction to the tax, and its area is one measure of the efficiency cost, or "deadweight loss," or "excess burden," associated with the excise tax.

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“…Anderson (1999) estimates that fraudulent transfers amount to $550 billion annually in the United States. Laband and Sophocleus (1992) report that investments in white-collar crime prevention cost $216 million in the United States in 1985. However, the scope of our inquiry is wider than fraud.…”

Section: Introductionmentioning

confidence: 99%

Can Observers Predict Trustworthiness?

Bélot

Bhaskar

Ven

2012

Review of Economics and Statistics

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Abstract-We investigate whether experimental subjects can predict behavior in a prisoner's dilemma played on a TV show. Subjects report probabilistic beliefs that a player cooperates, before and after the players communicate. Subjects correctly predict that women and players who make a voluntary promise are more likely to cooperate. They are able to distinguish truth from lies when a player is asked about her intentions by the host. Subjects are to some extent able to predict behavior; their beliefs are 7 percentage points higher for cooperators than for defectors. We also study their Bayesian updating. Beliefs do not satisfy the martingale property and display mean reversion.He that has eyes to see and ears to hear may convince himself that no mortal can keep a secret. If his lips are silent, he chatters with his fingertips; betrayal oozes out of him at every pore.-Sigmund Freud (1905)

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An Estimate of Resource Expenditures on Transfer Activity in the United States

Cited by 79 publications

References 11 publications

The solution to the Tullock rent-seeking game when R > 2: Mixed-strategy equilibria and mean dissipation rates

The solution to the Tullock rent-seeking game when R > 2: Mixed-strategy equilibria and mean dissipation rates

Three Sides of Harberger Triangles

Can Observers Predict Trustworthiness?

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