Transitional gains and rent extraction
Tullock (Bell J Econ 6:671–678, 1975) described a transitional gains trap in which the present value of rents is capitalized in the value of an asset required to get the rents. Owners of the assets just earn a normal rate of return on their assets, despite the inefficient policies that produced the...
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| Veröffentlicht in: | Public choice 2019-10, Vol.181 (1/2), p.127-139 |
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| creator | Holcombe, Randall G. |
| description | Tullock (Bell J Econ 6:671–678, 1975) described a transitional gains trap in which the present value of rents is capitalized in the value of an asset required to get the rents. Owners of the assets just earn a normal rate of return on their assets, despite the inefficient policies that produced the rents. The trap was that undoing the inefficient policy would impose a transitional loss on the owners of those assets. Tullock characterized the creation of transitional gains as a mistake, but combined with McChesney’s (J Leg Stud 16(1):101–118, 1987) rent extraction framework, the creation of transitional gains can be seen as a mechanism for rent extraction, not a mistake. Tullock (Bell J Econ 6:671–678, 1975) focuses on the value of assets required to obtain rents. Sometimes investment in those assets imposes a welfare loss on the economy, but the rent-seeking literature does not acknowledge that at other times it does not. Rent-seeking is typically not as economically costly as it appears to be in much of the rent-seeking literature. |
| doi_str_mv | 10.1007/s11127-018-0614-5 |
| format | Article |
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| source | Worldwide Political Science Abstracts; EBSCOhost Business Source Complete; Jstor Complete Legacy; EBSCOhost Political Science Complete; Springer Nature - Complete Springer Journals |
| subjects | Agricultural subsidies Assets Capital losses Economics Economics and Finance Expected values Extraction Investments Monopolies Owners Political economy Political Science Politics Present value Profitability Profits Public Finance Rates of return Rent-seeking Rents Subsidies Taxicabs Welfare |
| title | Transitional gains and rent extraction |
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