Rent-seeking Research Articles

Commitment or rent-seeking? Government incentive policies for ESG reporting in sustainable e-commerce logistics

In the sphere of e-commerce logistics industry, the credibility of Environment, Social, and Governance (ESG) reports by e-commerce logistics service providers (ELSPs) is critical for accurately conveying sustainability initiatives with transparency. Nonetheless, the actions of ESG rating stakeholders can significantly affect the truthfulness and authenticity of these ESG reports. Therefore, it becomes essential to develop comprehensive analytical methods and incentives policies to forestall any rent-seeking behavior that might emerge from potential collusion between ELSPs and ESG rating agencies (ERAs). This study presents a tripartite evolutionary game model to inspect the enduring strategic interplay among ELSPs, ERAs, and government regulators. The model illuminates the collective supervision outcomes molded by these stakeholder interactions. Choices available include ELSPs' decision to offer ESG-committed or basic services, ERAs' consideration to accept or decline rent-seeking requests from ELSPs, and regulators' options for either stringent or lenient supervision. The analysis also explores the influence of government incentives, such as rewards or penalties, in promoting ELSPs' provision of ESG-committed transportation services. Evolutionary stable strategies and conditions are then derived to capture the feature of incentive policies. The findings show that high ESG commitment transportation costs often deter ELSPs due to unpredictable future revenues, leading them to prefer a conservative strategy of providing basic services. Government regulations and incentives, however, can encourage in ESG transport, especially when ERAs’ rent-seeking charges are high. Despite the potential for relaxed supervision as ESG transport services become more widespread, strict government regulation remains crucial in motivating ELSPs to enhance their ESG commitment and adopt ESG transportation services.

The resource curse and the role of institutions revisited

AbstractMany studies have shown that natural resource abundant countries with strong institutions tend to escape the resource curse. Institutional quality has been examined using broad indices of rule of law, the rate of murder, the share of the shadow economy and provision of public goods. Nonetheless, we need to locate the specific institutional conditions under which the curse manifests since some “rule of law” countries like Nigeria and Angola are generally classified as resource cursed. In this review, I argue that managing and distributing natural resource wealth through a centralised planning strategy and lack of a binding long-term national development plan are institutional conditions that encourage government unaccountability as they do not restrict policy makers against discretionary distribution of natural resource windfall, rent seeking, clientelism and corruption which contribute to poor economic development and growth. Also, inadequate regulations on how to address the potential or actual impacts of natural resource extraction on the livelihood of local people and the environment tend to precipitate grievance-induced resource conflict.

The Relationship of Transaction Costs and Rent Seeking in Capture Fisheries

The capture fisheries sector in Indonesia is expected to have a major contribution to national income. The contribution of capture fisheries to state revenue was U$ 29.44 million compared to the acquisition value of fish production reached U$ 9.67 billion in 2018. Indonesia a rich country of fish in the world suffers from low income from capture fisheries whose value is only 0.25% of the total national income of natural resources and economic leakage of an average US $552.16 billion over the last twelve years. The low state revenue and economic leakage in the capture fisheries sector are suspected to be a result of rent-seeking behavior. For predicting rent-seeking behavior, this research applied the transaction costs economy approach. The study aims to reveal the relationship between transactions, transaction costs, and rents seeking in capture fisheries. The research used SEM (structural equation model) constructed from measured variables (observed) and latent variables (unobserved). Respondents came from 49 government agents (63%), 5 politicians (6%), and 24 people (31%) collected via electronic mail from September to October 2021. The results of this study show that transaction costs have an impact on rent-seeking in the capture fisheries sector. Of all the estimated variables, there is a significant relationship at the significance level of 0.05 and 0.000 (p = £ 0.05).

Rent Seeking in Power and Energy Sector in Bangladesh

As the power and energy sector of Bangladesh has become increasingly susceptible to external shocks like Ukraine war and dollar crisis, the growing dependency on imported energy is being questioned from the energy security point of view. While the technology and policy actors hold depletion of gas resources and the need for diversification as the reasons to justify increasing import dependency, the proponents for energy security using indigenous resources point out at the negligence in exploring potential indigenous gas reserve and the inability to deploy renewable energy. Why in last one-decade Bangladesh adopted new energies like coal, nuclear, and LNG, rather than exploring natural gas and incentivizing solar and wind, has still remained a puzzle. This paper uses the rent seeking framework to identify how rent seeking structures differ across energy technologies and whether the differences had any implications for incentivizing some energy use while not incentivizing others. Journal of the Asiatic Society of Bangladesh (Hum.), Vol. 68(2), 2023, pp. 263-286

Rent seeking and precautionary bidding in conservation auctions

AbstractThe paper presents a model to study reverse auctions for conservation contracts. A buyer elicits bids from multiple rent seeking and risk averse farmers. Conservation activities have ex post cost risk such that farmers only learn the true value of conservation contracts after the auction. The paper derives the optimal bidding function and shows that farmers have conflicting incentives when facing multiple sources of risk. Specifically, we show that farmers exhibit a form of precautionary bidding, that is, they increase their bids in response to an increase in valuation risk. We propose an approach to take the model to the data and recover structural risk parameters. The suitability of the approach to real‐world data is demonstrated through a Monte Carlo experiment.

Herding, taxpayer's rent seeking and endemic corruption

In an environment with extensive corruption where much of the population evades paying their full taxes due, we tackle the question of optimal taxation when constituencies with conflicting objectives (the poor and the rich) push tax policy in different directions. We think in terms of a government policy maker here called the tax administrator (TA) and rent-seeking lobbying efforts by poor and rich constituencies. We recognize the taxpayers’ inter-dependency as reflected in increased evasion likelihood when others are thought to be evading. Thus our modeling incorporates elements from the theory of information cascades (herding) into a standard model of tax evasion. The poor and rich undergo a rent-seeking contest seeking to influence the TA in setting policy so that their constituency is favored. The TA maximizes an objective function that is a weighted average of expected social welfare, their own interests, and investment in better tax administration. With these building blocks we examine the functioning of the economy. Our results include those that are expected, counterintuitive and surprising. For example, we learn that lower taxes on the rich does not mean the TA cares more about the public interest. Instead, it may result from the TA caring less about the public welfare of others in society, i.e., less about both the poor and the rich. Furthermore, with an increase in perceived inequality society's optimal tax rate rises. On the other hand, high tax levels lead to high herding and greater herding decreases investment by the poor and the rich attempting to affect the tax level set by the TA. Thus, a TA who only cares about their own self will enact lower tax levels than if they cared about others in the society.

Political Stability, Quality of Governance and Stock Market Performance in Nigeria: A VECM Approach

Governance structure is riddled with rent-seeking behaviour by public agents, public institutions are not only ineffective and retroactive but there is also no regards to rule of law, no accountability and above policy inconsistencies which affects the economy including vibrant development of the stock market. This paper examined the impact of political stability and quality of governance market performance in Nigeria from 1986-2022. The variables of this study are credit to the private sector, gross domestic product, inflation, and investment (domestic), and broad money supply. The other variables are political stability, quality of governance government expenditure, unemployment and value of stocks traded. The data for these variables were sourced from the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics of various years. This paper was anchored on the efficient market hypothesis and the impulse response function and variance decomposition was used. The result suggested that market capitalization was strongly endogenous in the short-run predicting itself about 93 percent and 86 to 85 percent in the long-run while a one standard deviation of shock from gross domestic product to market capitalization continuously decreased from periods 1 to 10. The conclusion from the analysis of the findings is that political stability and quality of governance impacted on stock market performance. This paper recommended economy-wide reforms tom stem the impact of negative shock on the economy and stock market.

Promoting the Low-Carbon Transition of Power Construction Projects under MRV: An Evolutionary Game Analysis

The actual situation of carbon-emission reduction in China’s power sector has not yet achieved the expected benefits. The rent-seeking behavior of participants in power construction projects (PCPs) hinders the realization of low-carbon benefits. It is necessary to explore the behavioral strategies of the various participants in the low-carbon transition of PCPs. This paper creatively constructs an evolutionary game model of PCPs’ participants from the perspective of MRV (monitoring, reporting, and verification) and introduces the influence of the public to provide a comprehensive analysis of strategic equilibrium points. Through numerical simulations with MATLAB R2021a software, this paper explores the strategic choices of participants in different situations and gives relevant inferences and proofs. The results show that the grid company dominates at the initial stage and promotes participants to regulate behaviors. Under the premise of satisfying the system-stability requirements, setting the growth rate of the grid company’s punishments to 100% can enhance the willingness for strict supervision, while the growth rate of the supervision costs to 200% significantly decreases the probability of strict supervision. With the integration of MRV and PCPs, participants spontaneously fulfill the carbon-emission-reduction tasks. Reasonable control of input costs can effectively avoid the occurrence of rent-seeking behavior. In addition, this paper sets the public-influence growth rate at 200% and finds that the public plays a greater role in driving participants to fulfill responsibilities. Based on the results, a low-carbon transition mechanism for PCPs under the MRV system is proposed by considering several dimensions, which provides suggestions for participants to fulfill carbon-reduction responsibilities.

Power and rent-seeking in the second homes tourism market: evidence from selected villages in Iran

ABSTRACT Numerous studies have examined the challenges associated with developing second-home (SH) tourism in rural areas. However, little attention has been given to exploring the influence of power dynamics and rent-seeking behavior on the Real Estate Market for second homes (SHs). To address this research gap, our study conducted face-to-face interviews with key stakeholders in five selected villages in Iran. Our objective was to investigate the impact of power and rent-seeking on the SH market. Our findings reveal that rent-seeking activities have significantly increased in the Real Estate Market for SHs in these villages due to legal loopholes, weak rule of law, inadequate supervision, and severe economic crises. Rent-seeking has emerged as the dominant and most profitable activity within this market. By shedding light on the processes of rent-seeking in the Real Estate Market for SHs in developing countries, our study enhances our understanding of this issue. It contributes to the formulation of effective policies and regulations.

EU trade liberalisation, sectoral coalitions and development: insights from Moldova and Georgia

ABSTRACT This paper contributes to the literature on EU trade policy by introducing insights from the political economy literature on development to the study of how EU trade liberalisation affects development in trading partners. Drawing on a comparison of EU trade liberalisation with Moldova and Georgia, we argue that the type of coalition between public and private actors in partner countries’ top export sectors determines which firms benefit from better market access to the EU, as indicated by their ability to increase their exports. We show that liberalised trade with the EU tends to contribute to achieving the EU’s declared objective of inclusive development if the presence of inclusionary development coalitions ensures that a broad range of firms is enabled to increase their export capacities through a mechanism that we call ‘inclusive empowerment’. Otherwise, trade liberalisation contributes to exclusive development, benefitting big, mostly foreign firms, or, at worse, consolidating rent-seeking practices.

История экономической мысли глазами структуралиста (Часть 1. Классики и Маркс)

The paper attempts to rethink the problem of the optimal structure of the economy and economic growth in the history of thought. The concept of «post-truth» according to S. Fuller is used. A. Smith used the strategy of changing speech practices and interpreting facts against the mercantilists, and subsequently K. Marx did the same for the entire classical school. The history of thought legitimizes the economic mainstream — the dominant version of economic theory, ignoring the previous versions of rhetorical domination. The central role in the problem of determining the optimal structure of the economy is given to the old discussion about the relationship between productive and unproductive labor. Both Smith, and Ricardo, and Marx were looking for the main source of value and mechanisms for its redistribution and withdrawal in favor of certain social groups. The division into productive and non-productive types of economic activity is recognized as incorrect and discarded at modern time. Condemned by A. Smith the orientation of economic agents towards extracting rent can block economic growth in fact. As D. Ricardo shows, rent-seeking behavior can lead to the disappearance of profits and the achievement of the so-called «stationary state» under certain conditions,. The principle of comparative advantage, Ricardo discovered the principle of comparative advantage. That contradicts both «equilibrium in the long run» and the theory of labor value. This principle makes it possible to build a hierarchy of geopolitical subjects in the spirit of world-system analysis with a certain modification,. Marx ignores this principle, using «surplus value» as the basis of his concept. According his approach value is created only in the sphere of material production. This kind of research leaves the problem of the optimal structure of the economy unresolved.

Corporate ESG performance when neighboring the Environmental Protection Agency

Practicing ESG concept is a necessary way for sustainable development of enterprises and an important hand in realizing high-quality economic growth. This paper introduces the hypothesis of “distance attenuation effect” of geo-economics into the research field of corporate ESG performance, and systematically examines the impact of neighboring the Environmental Protection Agency (EPA) on corporate ESG performance by using the data of China's listed companies in the manufacturing industry from 2011 to 2021. It is found that being a neighbor to the EPA has a significant inhibitory effect on corporate ESG performance, which was reduced by 0.196% when the distance between the two was reduced by every 1 km. And the inhibitory effect has a stepwise decreasing characteristic, i.e., it is the strongest at the level of county EPA, followed by municipal EPA, and the smallest at the level of provincial EPA. The mechanism analysis shows that the rent-seeking behavior caused by neighboring with EPA is an important reason for the decline of ESG performance, which verifies the “distance attenuation effect” of rent-seeking difficulty. Although neighboring the EPA improves firms' financial performance, it greatly harms firms' environmental, social and governance performance, which confirms the profit-seeking motive of firms' rent-seeking. In addition, the deterrent effect generated by third-party supervision and digital supervision can inhibit corporate rent-seeking to a certain extent, which helps weaken the negative impact of neighboring the EPA on corporate ESG performance.

Crime, conflict, and commodities: Peruvian piracy and the natural resource curse

ABSTRACT Over the last two decades, Peru has become a global piracy hotspot, eliciting surprise and concern among the international maritime community. Despite increased attention, Peru remains underexamined in maritime piracy research. In this case-study analysis, we brought together two research fields (e.g. maritime piracy and the natural resource curse) to investigate socio-historical factors that accounted for long-term trends in Peruvian piracy. The maritime piracy literature, which largely examines famous sites off the coasts of Africa and southern Asia, identifies several determinants, including state weakness, economic opportunity, and geography. Because Peru is a heavily extraction-dependent state, we also examined mechanisms of the natural resource curse. Considerable overlap in explanatory factors exist. While we found several determinants identified in the maritime piracy literature present in the Peru case, such as state weakness and social conflict, analyses also indicated that mechanisms of the natural resource curse, particularly commodity price volatility and rent seeking, are also positively related to piratical activity. Overall, our findings extend the maritime piracy and natural resource curse literatures and suggest that counter-piracy efforts in Peru critically examine extractive policies for latent effects.

Rent dissipation and streamlined costs: Laboratory experiments

The effect of group size and effort cost on rent dissipation in the standard Tullock rent seeking model is examined using a laboratory experiment. Data support qualitative comparative static Nash equilibrium predictions as reductions in both group size and effort cost increase effort levels. However, effort and dissipation rates are above Nash predictions for all treatments. In addition, while cutting per-unit effort costs in half increases individual effort levels, they do not fully double as predicted and therefore lower rent dissipation, creating a policy-relevant “streamlining effect”. A quantal response equilibrium, which adds stochastic elements into the game structure, predicts the observed higher effort levels and dissipation but is proven to be unable to explain the streamlining effect. A modification of quantal response that incorporates implementation error noise and loss aversion outperforms other estimated models and tracks the observed all data patterns more closely, including the streamlining effect.

IMPACT OF LEGAL AND REGULATORY QUALITIES ON FDI INFLOW: A COMPARISON OF DEVELOPED AND DEVELOPING COUNTRIES

The objective of this research is to determine the impact of legal and regulatory qualities on foreign direct investment (FDI) inflows and explore its impact in developed and developing countries, comparatively. The sample comprises data on FDI inflows from 66 countries, spanning the period 2008 to 2021. To estimate the regression parameters, the quantile regression with fixed effects model proposed by Machado and Santos Silva (2019) was employed. Additionally, the regression results were supported using random effects and fixed effects models with Driscoll-Kraay (1998) standard errors. The results of the quantile regression analysis reveal that legal and regulatory qualities have a positively significant effect on FDI inflows. This impact is greater in developing countries than in developed countries, and the discrepancy increases with higher FDI levels. These findings hold important policy implications for decision-makers. To attract FDI, particularly in developing countries, it is crucial to strengthen legal systems by safeguarding property rights, establishing contractual certainty, and implementing effective dispute resolution mechanisms. More so, efforts should be taken to reduce rent-seeking behavior and prevent powerful groups from receiving unfair advantages. Failure to address these issues may increase the risks and impede a country's economic development in the long run.

Blockholdings, Dividend Policy, Stock Returns and Return Volatility: Evidence from the UAE

This paper examines the relationship between the presence of blockholdings and stock returns and return volatility in the United Arab Emirates. Earlier studies report mixed results for the direction of the relationships across both developed and emerging markets. This study focuses specifically on these relationships in a dividend policy framework. This study further investigates the role of blockholder type by distinguishing between government, individual and corporate blockholders. Our results indicate that blockholder ownership reduces stock return volatility for both non-dividend-paying and dividend-paying stocks, does not impact returns and is not perceived as expropriating the wealth of other investors. We also conclude that the blockholders do not exhibit rent-seeking behavior through the extraction of dividends and investors in UAE firms embrace the role of blockholders and the reinvestment of profits.

Entangled oligarchies: structure, agency and rent seeking in South Africa

Entangled oligarchies: structure, agency and rent seeking in South Africa

상호의존적 선호 하에서의 반복된 지대추구

Players can engage in repeated games, and each player may be interested in not only their own payoffs but also those of their rivals. For example, scholars compete repeatedly to publish papers, caring about their own achievements as well as those of their rivals. Tullock conjectured that rent-seeking efforts would increase in repeated games. In contrast, previous research has shown that rent-seeking efforts decrease in repeated games. This study expands on existing rent-seeking literature by analyzing rent-seeking behavior of players with dependent preferences in repeated games. To accomplish this, the study adopts the logit contest proposed by Tullock and analyzes repeated games between two players with interdependent preferences. That is, this study investigates situations where each player experiences emotions of altruism and spite towards their competitor and plays games repeatedly. There are two types of games with interdependent preferences: repeated games considering exogenous interdependent preferences and repeated games considering endogenous interdependent preferences. This research demonstrates the equilibrium result that 'altruism and co-movement reduce rent-seeking efforts' when interdependent preferences are exogenous. Next, when considering endogenous interdependent preferences, the equilibrium results are as follows. First, repeated games induce spite, meaning repeated rent-seeking excludes altruism. Second, the higher the intensity of co-movement between players, the greater the spite that arises. Third, players' spite increases rent-seeking efforts and reduces their payoffs. This study presents spite as the primary rationale for the increase in rent-dissipation in repeated games, as speculated by Tullock.

공공선택학에 관한 제임스 뷰캐넌 사상의 확장

This essay attempts to portray the story of public choice as an intellectual enterprise. I discuss James Buchanan’s perspective on public choice as collective decision making and politics as complex exchanges. To this foundation of public choice, Tullock introduced rent seeking which opened up a new dimension in public choice research. It allowed (us) to analyze the causes of government failure. Much work has been written on these subjects and will continue so (to be done). However, Buchanan’s work after his Nobel (1986) has not been much discussed as carefully as it should be. This is unfair to Buchanan as a thinker. To cover this, I discuss his work on generalized increasing returns and the economics of ethics.

Williamson’s Institutional Analysis of Investments: A Case Study of Bulgarian Forestry

Fixed Capital Formation in Bulgarian forestry in 2016 and 2017 amounts respectively to 4.90 million EUR and 10.37 million EUR, which assigns Bulgarian forestry to the unsatisfactory 14th place from 15 EU member states by level of investments. In this respect an attempt is made to answer the question: ‘Which are the reasons for insufficient investments in forestry in Bulgaria?’. The response to that question is searched by means O. Williamson’s four level institutional analysis. Based on a questionnaire survey among specialists working in forestry and hypotheses testing through ?2-analysis it is established that among the main reasons for insufficient investment in Bulgarian forestry are some market failures as rent seeking and opportunism. Furthermore by means of Cramer’s coefficients it is established that the link between investments and both market failures is strong in terms of strength. According to 80.3% of the inquired specialists, the limitation of market failures in forestry is possible through increasing the share of stewardships activities carried out by territorial departments of state enterprises with their own forestry equipment and workers.