Measuring the Deadweight Costs of DUP and Rent Seeking Activities

Abstract

I examine a simple model of rent seeking behavior in order to determine the correct way to measure welfare loss due to rent seeking. I conduct this analysis using a general equilibrium version of the standard partial equilibrium consumers' surplus cost-benefit setup. I conclude that the ordinary tools of cost-benefit analysis, such as consumers' and producers' surplus are upto the task of measuring the deadweight loss due to rent seeking, as long as they are applied in the proper general equilibrium context.