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Rent Seeking with Politically Contestable Rights to Tariff-rate Import Quotas†
Article first published online: 16 SEP 2005
DOI: 10.1111/j.1467-9396.2005.00538.x
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How to Cite
Hranaiova, J. and Gorter, H. d. (2005), Rent Seeking with Politically Contestable Rights to Tariff-rate Import Quotas. Review of International Economics, 13: 805–821. doi: 10.1111/j.1467-9396.2005.00538.x
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Publication History
- Issue published online: 16 SEP 2005
- Article first published online: 16 SEP 2005
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Abstract
This paper analyzes rent seeking for agricultural import quotas and the associated waste of resources when politically contestable licenses are allocated to either or both importers and exporters. In a two-stage simultaneous contest where firms seek rent for licenses and then bargain over the import/export price, it is shown that (1) rents are not dissipated completely because of uncertainty in allocation of “rights,” (2) the dissipation ratio increases if the country with a more competitive contest increases the probability of establishing licenses, (3) rent seeking may cause the market structure to change, (4) less rent is dissipated in the case of pre-existing market power, and (5) allocation of multiple licenses decreases rent-seeking outlays.