Rent-seeking and the privatization of the commons

In this paper a small two sector model is developed and used to analyze the private versus common property debate in the presence of resource-using rent-seeking. We are able to demonstrate that, in contrast to the existing literature, there may be a gain associated with privatization even when rent-...

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Bibliographic Details
Published in:European Journal of Political Economy 1990, Vol.6 (1), p.41-59
Main Authors: Brooks, Michael A., Heijdra, Ben J.
Format: Article
Language:English
Subjects:
Privatization
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Summary:In this paper a small two sector model is developed and used to analyze the private versus common property debate in the presence of resource-using rent-seeking. We are able to demonstrate that, in contrast to the existing literature, there may be a gain associated with privatization even when rent-seekers spend all the scarcity rent on the lobbying activity. We also challenge the traditional result which states that privatization will necessarily lead to a reduction in the rate of renumeration to the mobile factor.
ISSN:0176-2680
1873-5703
DOI:10.1016/0176-2680(90)90035-H