Power Privilege and Special Interests Rent Seeking and
![A Game Theoretic Approach: G=[I, {Si}, {Ui}] MONSANTO DUPONT Don’t lobby Lobby Don’t lobby](https://slidetodoc.com/presentation_image_h2/759b0a5d13bad45673e5dd65424d5a0e/image-6.jpg "A Game Theoretic Approach: G=[I, {Si}, {Ui}] MONSANTO DUPONT Don’t lobby Lobby Don’t lobby")
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Power, Privilege, and Special Interests: Rent Seeking and Subsidies in Agriculture “People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in conspiracy against the public”- Adam Smith “Invention is continually exercised to furnish new pretenses for revenue and taxation- Thomas Paine
Rent Seeking Rent- excess return over normal rate of return v Rent Seeking- pursuing gov’t intervention that will provide rents. v
Biotech Industry v Monsanto and Calgene in 1980’s FDA, EPA, USDA v Increase Costs 10 -20 X (Conko, 2004) v Monsanto, Dupont/Pioneer, Bayer/Aventis, Dow~57% biotech R&D ( Miller and Conko, 2003) v Complementary intellectual assets ( Graff, 2003)
School Lunch Program v $7. 1 billion v Donated commodities purchased by USDA v From soft drink machines to milk-Vermont Democratic Senator Patrick Leahy and CSPI
Ethanol v Value added~$. 14 -. 25 bu v Federal Subsidy: $. 52 gal ( Nalley, 2003) v TX $. 20/gal production ( Richardson, 2003) v ADM – 1990 Clean Air Act: 2. 7% oxygenate requirement ( Bovard, 1995)
A Game Theoretic Approach: G=[I, {Si}, {Ui}] MONSANTO DUPONT Don’t lobby Lobby Don’t lobby (20, 20) Cooperation (0, 30) Monsanto Loses (30, 0) Dupont loses Lobby (10, 10) Nash Equilibrium
Conclusion: Reforms v Campaign Finance Reform v Restoration of Constitutional Constraints v Super majority voting/referendums
References: v Bovard, James. Archer Daniels Midland: A Case Study In Corporate Welfare. Cato Policy Analysis No. 241 September 26, 1995 v Graff, Gregory D. , Rausser, Gordon C. et al. , Agricultural Biotechnology's Complementary Intellectual Assets. Review of Economics and Statistics, Vol. 85, Iss. 2, May 2003. v Henry I. Miller and Gregory Conko. Bootleggers and Biotechs. Regulation. Summer 2003 v Henry I. Miller and Gregory Conko. Freeing the Biotech Revolution CEI’s Monthly Planet Advancing Liberty — From the Economy to Ecology NOVEMBER 2004 COMPETITIVE ENTERPRISE INSTITUTE VOLUME 17, NUMBER 9 v Nalley, Lanier and Hudson , Darren. The Potential Viability of Biomass Ethanol as a Renewable Fuel Source: A Discussion. Mississippi State University Department of Agricultural Economics Staff Report 2003 -003 August 2003 v Richardson et al. An Analysis of Ethanol Production in Texas Using Three Ethanol Facility Sizes and Their Relative Optimal Subsidy Levels. Selected Paper prepared for presentation at the Southern Agricultural Economics Association 35 th Annual Meeting, Mobile, Alabama, February 1 -5, 2003.
