Price-Distorting Compensation Serving the Consumer and Taxpayer Interest

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1992-06-01
Authors
Foster, William
Rausser, Gordon
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Center for Agricultural and Rural Development

The Center for Agricultural and Rural Development (CARD) conducts innovative public policy and economic research on agricultural, environmental, and food issues. CARD uniquely combines academic excellence with engagement and anticipatory thinking to inform and benefit society.

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In this paper we address a bothersome question for public choice analysis: Why do consumers and taxpayers acquiesce to seemingly inefficient wealth transfers to a relatively small number of producers? The most common and briefest answer given by political economists is that any individual consumer/taxpayer suffers too little in the rent-seeking game to bear the cost of opposing the aggressive political influence of producers who enjoy the concentrated benefits. In this paper we examine an alternative answer lying in the potential benefits that accrue to consumers and taxpayers from price distorting wealth transfers to heterogeneous producers.

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Wed Jan 01 00:00:00 UTC 1992
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