The Tullock Paradox

Re: the previous post on relatively low sums of money going a long way in political lobbying, DF reader Jerry Brito pointed me to the Tullock Paradox:

The term Tullock paradox refers to the apparent paradox first observed by the public choice economist Gordon Tullock on the low costs of rent-seeking relative to the gains from rent-seeking. The paradox is basically that rent-seekers seeking political favors can usually bribe politicians to give them the favors at a cost much lower than the value of the favor to the rent-seeker. For instance, a rent seeker who hopes to gain a billion dollars from a particular political policy may need to bribe politicians only to the tune of ten million dollars, which is about 1% of the gain to the rent-seeker.

See also: Tyler Cowen has been writing about the Tullock Paradox for years at Marginal Revolution.

★ Tuesday, 21 April 2015