Book contents
- Frontmatter
- Contents
- Preface
- Readings in the economics of contract law
- Part I Some preliminaries
- 1.1 Non-contractual relations in business: a preliminary study
- 1.2 Relational exchange: economics and complex contracts
- 1.3 Production functions, transactions costs, and the new institutionalism
- 1.4 The market for “lemons”: quality uncertainty and the market mechanism
- 1.5 A treatise on the law of marine insurance and general average, volume I
- 1.6 The economics of moral hazard: comment
- 1.7 The economics of moral hazard: further comment
- 1.8 Efficient rent seeking
- Questions and notes on rent seeking
- Part II Contract law and the least cost avoider
- Part III The expectation interest, the reliance interest, and consequential damages
- Part IV The lost-volume seller puzzle
- Part V Specific performance and the cost of completion
- Part VI Power, governance, and the penalty clause puzzle
- Part VII Standard forms and warranties
- Part VIII Duress, preexisting duty, and good faith modification
- Part IX Impossibility, related doctrines, and price adjustment
- Questions and notes on impossibility and price adjustment
- References
- Index of cases
- Author index
- Subject index
Questions and notes on rent seeking
Published online by Cambridge University Press: 10 November 2010
- Frontmatter
- Contents
- Preface
- Readings in the economics of contract law
- Part I Some preliminaries
- 1.1 Non-contractual relations in business: a preliminary study
- 1.2 Relational exchange: economics and complex contracts
- 1.3 Production functions, transactions costs, and the new institutionalism
- 1.4 The market for “lemons”: quality uncertainty and the market mechanism
- 1.5 A treatise on the law of marine insurance and general average, volume I
- 1.6 The economics of moral hazard: comment
- 1.7 The economics of moral hazard: further comment
- 1.8 Efficient rent seeking
- Questions and notes on rent seeking
- Part II Contract law and the least cost avoider
- Part III The expectation interest, the reliance interest, and consequential damages
- Part IV The lost-volume seller puzzle
- Part V Specific performance and the cost of completion
- Part VI Power, governance, and the penalty clause puzzle
- Part VII Standard forms and warranties
- Part VIII Duress, preexisting duty, and good faith modification
- Part IX Impossibility, related doctrines, and price adjustment
- Questions and notes on impossibility and price adjustment
- References
- Index of cases
- Author index
- Subject index
Summary
The arithmetic underlying Tullock's paper is not, numerous law students and faculty have informed me, entirely clear. Herein follow some exercises that might help provide a better understanding of what is going on. I will concentrate on the simplest case in which there are two identical parties, Alan (who buys A tickets) and Bob (who buys B tickets). The central point of the rent-seeking model (an awful name, but we are probably stuck with it) is that the efforts of one party change the rewards to a given level of effort by the other party. In equilibrium each party, in effect, asks the following question: If I had to choose the number of tickets (or level of effort or whatever) first, and the other guy was then going to purchase his tickets knowing what I have done, what should I do? If I assume that the other guy would try to maximize his expected profits, then I can ask myself what would my profits be on the assumption that the other guy makes his best response. Then I choose that level that maximizes my expected profits.
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- Readings in the Economics of Contract Law , pp. 43 - 50Publisher: Cambridge University PressPrint publication year: 1982