Price induced increases in land rents trigger an increasing incentive for rent- seeking behavior. To analyse distributional and welfare eects of increasing land rents in developing countries, we develop a game theoretic model where a large and heterogeneous group of farmers competes with a small and wealthy elite. The results indicate that only relatively small rent increases benet the farmers more
than the elite. Moreover, political institutions have an ambiguous eect on farmers' rent share, and may even reduce overall welfare, because they induce wasteful expenditure on rent-seeking.
|Number of pages||27|
|Publication status||Published - 2014|