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Some empirical evidence on rent-seeking

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Abstract

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 twelve-year 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.

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Authors and Affiliations

  1. Faculty of Business, University of Alberta, T6G 2R6, Edmonton, Alberta, Canada

    R. L. Beck

  2. T6J 3J6, Edmonton, Alberta, Canada

    J. M. Connolly (Connolly and Associates, Research Consultants)

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  1. R. L. Beck
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  2. J. M. Connolly
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Additional information

The authors appreciate the financial support of the J.D. Muir Research Fund and the Faculty of Graduate Studies and Research of the University of Alberta.

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Beck, R.L., Connolly, J.M. Some empirical evidence on rent-seeking. Public Choice 87, 19–33 (1996). https://doi.org/10.1007/BF00151727

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