They found high social costs of monopoly in both economies, emphasizing that their social cost estimates were, in contrast to Posner, for private monopoly power. As will be argued later, the empirical magnitude of rent-seeking costs is now a matter of some controversy in the literature.
There are many empirical consequences on the social expenses of rent seeking, depending on the methodology, coverage, and economy analyzed by the author. Krueger (1974) recommended that 7 percent of Indian GNP was wasted in rent seeking and 15 percent of Turkish GNP was lost because of rent seeking for import licenses. Posner (1975) estimated that as much as 3 percent of U.S. GNP was lost because of the social costs of monopolization throughout regulation. These are clearly substantial sums of money in any economy. Cowling and Mueller (1978) consequential a guesstimate that the rent seeking and deadweight costs of private monopoly in the United States was 13 percent of gross corporate product. (Ekelund, pp 13-19)
The consequen ...Show more