Working Paper No. 03-53:
Rents, Dissipation and Lost Treasures: Rethinking Tullock's Paradox

Author(s):

Giuseppe Dari-Mattiacci, Francesco Parisi

Date Posted: 2003

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Abstract:

In this paper we revisit Tullock's (1980) paradox and consider a rent-seeking game in which parties face increasing returns to effort. We allow parties to randomize their strategies and give them an exit option. Given the mixed participation strategies of the parties, valuable rents may occasionally remain unexploited. We consider such a lost-treasure effect as an additional cost of rent-seeking and consider how the expected value of such a lost rent varies with changes in the parameters of the problem.