Acemoglu and Robinson (in The American Economic Review 90(2):126–130, 2000) argue that historically economic rents have been less of a barrier to regulatory reform and innovation than political rents. Contrary to this conclusion, I argue that the important margin of distinction for factors preventing deregulation is not whether rents are economic or political, but rather what alternative profit opportunities are available and how innovation has changed the entrepreneurial opportunity set. Using the example of medieval Cologne, I show that the transitional gains trap framework, as developed by Tullock (in The Bell Journal of Economics 6(2):671–678, 1975), applies in a static environment and can successfully prevent reform over long periods of time, but that neither political nor economic entrepreneurs will ignore an opportunity for increased profitability in the long run. In addition, the organization of the political unit to which the regulation applies can determine the persistence of said regulation.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Tax calculation will be finalised during checkout.
Acemoglu, D., & Robinson, J. A. (2000). Political losers as a barrier to economic development. The American Economic Review, 90(2), 126–130.
Ashurst, P. R. (1971). Hops and their use in brewing. In W. P. K. Findlay (Ed.), Modern brewing technology (pp. 31–59). London: Macmillan.
Benson, B. (2002). Regulatory disequilibrium and inefficiency: the case of interstate trucking. Review of Austrian Economics, 15(2/3), 229–255.
Grant, H. L. (1995). Hops. In W. A. Hardwick (Ed.), Handbook of brewing. New York: Marcel Dekker.
Huiskes, M. (2008). Bier in Koeln vor dem 18. Jahrhundert. Online Document. Koelner Brauereiverband e.V. http://kbv.terramedia.de/index.php/Bier_in_K%C3%B6ln_vor_dem_1800_Jahrhundert#column-one.
Leeson, P., & Subrick, J. R. (2006). Robust political economy. Review of Austrian Economics, 19, 107–111.
McCormick, R. E., Shughart, W. F., & Tollison, R. D. (1991). The disinterest in deregulation. The American Economic Review, 74(5), 1075–1079.
Peltzman, S., Levine, M. E., & Noll, R. G. (1989). The economic theory of regulation after a decade of deregulation. Brookings Papers on Economic Activity. Microeconomics, 1–59.
Stigler, G. J. (1971). The theory of economic regulation. The Bell Journal of Economics and Management Science, 2(1), 3–21.
Tollison, R. D., & Wagner, R. E. (1991). Romance, realism, and economic reform. Kyklos, 44(1), 57–70.
Tullock, G. (1967). The welfare cost of tariffs, monopolies, and theft. Western Economic Journal, 5, 224–232.
Tullock, G. (1975). The transitional gains trap. The Bell Journal of Economics, 6(2), 671–678.
Unger, R. W. (2004). Beer in the Middle Ages and the Renaissance. Philadelphia: University of Pennsylvania Press.
Von Blanckenburg, C. (2001). Die Hanse und ihr Bier: Brauwesen und Bierhandel im hansischen Verkehrsgebiet. Koeln: Boehlau.
Von Loesch, H. (1907). Die Koelner Zunfturkunden nebst anderen Koelner Gewerbeurkunden bis zum Jahre 1500. 2. Band. Spezieller Teil. Nachdruck Ausgabe Bonn 1984. Duesseldorf: Droste.
About this article
Cite this article
W. Thomas, D. Deregulation despite transitional gains. Public Choice 140, 329–340 (2009). https://doi.org/10.1007/s11127-009-9420-4
- Transitional gains trap
- Rent seeking
- Economic history