Social losses from rent-seeking can exceed the rents themselves.
Tullock's 1967 insight. If a monopoly worth a billion is up for award, competitors will rationally spend up to a billion competing for it, and that spending produces nothing.
In practice
- A franchise worth £40m draws four bidders who each spend £3m on advisers, and £12m is consumed before anything is built.
- A grant round worth £2m attracts £600,000 of bid-writing effort across forty applicants, and thirty-nine of those bids produce nothing.