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More on Allegedly Wasteful Competition

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Here’s a paper that I published in 1989, in the Journal of Institutional and Theoretical Economics, on the question of wasteful rent-seeking and competition [2].  (I just re-read it, and here brag that it’s held up reasonably well over the past quarter-century.)

This 1989 paper of mine does not directly address what I take to be Steve Landsburg’s claim [3] that some competition among private firms is rather like “Red Queen” competition [4]: much struggle among rivals to out do each other but in the end all of that struggle canceling out.  (See also Steve’s comments on this recent Cafe Hayek post [5].)  Resources and effort are spent in futile attempts to gain a competitive advantage.  Socially, it’s all running in place: much expenditure of effort and resources with no (or too little) advance.  Such expenditures of effort and resources, having produced nothing (much) of value – all such expenditures canceling each other out – these expenditures appear to be socially wasteful.

Yet while my 1989 paper doesn’t directly address this “Red Queen” phenomenon, it does come quite close to doing so.

I’ll say more on this matter in a few days.