The Opportunity Costs of Rent Seeking

Abstract

The costs of rent seeking exceed traditional measures when opportunity cost is considered. When die quantity of resources consumed by rent seeking is large, rent seeking draws consumer surplus out of alternative resource employments. The costs of rent seeking differ in partial and general equilibrium frameworks; Tullock (1989) recognizes this but incorrectly argues that rent seeking costs are twice as large in general than in partial equilibrium. Other authors suggest that rent seeking costs are lower once the opportunity costs of resources used in rent seeking are considered. We clear up the confusion in the current literature.