Rent seeking leads to a misallocation of resources that worsens economic outcomes and reduces aggregate welfare. We conduct a quantitative examination of the distributional effects of rent extraction via the financial sector. Rent seeking introduces a possibility for insurance against...

Political connections between firms and autocratic regimes are not secret and often even publicly displayed in many developing economies. We argue that tying a firm's available rent to a regime's survival acts as a credible commitment forcing entrepreneurs to support the government and to exert...

We study the rent-seeking phenomenon using a simple, static general equilibrium model. The economy consists of two sectors, both employing a constant returns-to-scale technology with labor as its sole input. One of the sectors is a monopoly, where a continuum of agents compete for a share of...

We introduce a dynamic model that investigates the persistence and evolution of elite-dominated societies, where inherited political capital determines one’s social standing. Our analysis highlights the critical role of the distribution of exit options in the evolution of political...

Many organizations nowadays combine profits with a social mission. This paper reveals a new hidden benefit of the mission: its role in facilitating the emergence of efficiency wages. We show that in a standard gift-exchange principals highly underestimate agents' reciprocity and, thereby, offer...

We analyze the economic consequences of strategic delegation of the right to decide between public or private provision of a governmental service and/or the authority to negotiate and renegotiate with the chosen service provider. Our model encompasses both bureaucratic delegation from a...

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients; high-benefit patients who choose between neighbouring hospitals (competitive...

We analyze whether or not the globalization of capital, disciplines governments and improves governance. We demonstrate that globalization affects governance, by increasing a country's vulnerability to sudden capital flight. This increased threat of capital flight can discipline governments and...

From marketing and advertising to political campaigning and court proceedings, contending parties expend resources to persuade an audience of the correctness of their view. We examine how the probability of persuading the audience depends on the resources expended by the parties, so that...

History is replete with overt discrimination on the basis of race, gender, age, citizenship, ethnicity, marital status, academic performance, health status, volume of market transactions, religion, sexual orientation, etc. However, these forms of discrimination are not equally tolerable. For...