(DP 1993-06) Rent Intensity and Indirectly Endogenous Rent

Abstract

Consider rent sourced from the value-added generated by productive investments. The amount dedicated to the pursuit of rent affects the aggregate value added and the size of rent itself, i.e. endogenous rent. We introduce rent intensity as the analytic tool and characterize it by relating it to the Tullock dissipation rate under specific assumptions on rent structure, risk attitude and membership size in the symmetric Cournot-Nash equilibrium. Among others we show that with proportionally endogeneous rent, with risk aversion of non-Inada variety, complete indifference and dissipation are not attainable.