Uncontestable favoritism

Tullock himself did not always clearly distinguish these two aspects. He once (1989, p. vii) defined rent seeking as “the use of resources in actually lowering total product although benefiting some minority.”

This is the standard model and it is beyond the scope of the present paper to quibble with it. But it should be noted that one might seek favor by offering a bribe or making a PAC contribution, but those sorts of expenditures are not socially costly since they transfer value to the policy maker (Hillman and Katz 1987). Properly understood, these expenditures should not be considered rent-seeking expenditures. Rent seeking refers to the dissipation—not transfer—of real resources. It refers to costly efforts to persuade or cajole policy makers, costly efforts to alter business practices in ways that create value for policy makers at the expense of consumers, or even to costly efforts to hide or disguise illicit transfers. The contest success function in Eq. (1) glosses over this distinction. I thank Randall Holcombe for reminding me of this point.

Dari-Mattiacci et al. (2015) consider contests in which players may reallocate rents after they have been distributed. In that case, another type of asymmetry, which they call “cunning”, becomes relevant. It refers to a player’s ability to strike a better deal in the second phase.

Deriving the first-order condition from (7), we find that the optimal \(c_{2}\) rises with \(\delta\). And doing the same with (6), we find that, over all relevant values of the parameters (that is, those in which \(\frac{R}{{4c_{2} }} > \delta\)), \(c_{1}\) also rises with \(\delta\).

The degree of randomness likewise could be parameterized. For example, consider the profit function \(\pi_{1}^{e} = \frac{R}{{2^{x} }}\left( {\frac{{c_{1} }}{{c_{1} + c_{2} }}} \right)^{1 - x} - c_{1}\). If \(x = 1\), this becomes identical to Eq. (8). And if \(x = 0\), it becomes the familiar \(\pi_{1}^{e} = R\left( {\frac{{c_{1} }}{{c_{1} + c_{2} }}} \right) - c_{1}\).

For a critique of Leibenstein’s theory, see Stigler (1976).

Buchanan emphasized generality and non-discrimination throughout his career. For an extended discussion of the topic, see Buchanan and Congleton (1998).

For an examination of a typical market, see Scrogin et al. (2000).

In the standard contest success function, the highest bidder wins, reducing the odds that a low-valuation winner will prevail (Hillman and Riley 1989).

For many, but not all observers. Some may view a cycle as just if it permits different factions to take their turn in power or if it permits some experimentation with different policy options (Buchanan 1954).

The order often is not random. See Sect. 5.4.6 below on agenda setters.

California has such an open primary system and in the 2018 primaries, many Democrats worried about this scenario.

The corruption case against former Virginia Governor Bob McDonnel illustrates the ambiguity. The governor and his family received over $135,000 in gifts, loans and trips from Virginia businessman Jonnie Williams, Sr. But it is not entirely clear that those concessions occurred because of Williams’s friendship with the family or because he expected something in return from the governor. In any case, the record suggests that the governor never did offer Williams much of value in the way of special favoritism.

Exceptions to this general rule exist. For example, Congleton (1991) also notes that if ideologically motivated and economically motivated interest groups coordinate their efforts, rent-seeking activity may increase. Furthermore, Aligica and Tarko (2014) consider societies in which the prevailing ideologies legitimize rent seeking.

Tullock’s (1989) monograph, The economics of special privilege and rent seeking was dedicated to the paradox. In it, Tullock suggests a number of explanations, the most promising of which may be that people contest rents through collective action rather than as individuals. See Hillman and Ursprung (2016) for more details.

This would seem to be an underexplored aspect of rent seeking and an explanation for Tullock’s paradox.