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Because of dynamic information rents, the official may induce one type of the borrower to default.
It may also involve higher information rents and may reduce the net contributions of some farmers.
This model underlines the trade-off between information rents and allocative efficiency.
We show that the Faustmann landowners receive information rents, on average 55% of the rental payments.
It also reveals that the induced information rents create discontinuities in the wage profile.
Despite the high information rents, landowners' conservation motives decrease the rental payment required for participation in the conservation program.
Similar(16)
Landowners with poor reputation sacrifices information rent; rather they buy reputation.
Our results are a high reputation firm receives less than optimal transfer; the low reputation firm sacrifices information rent.
The results also show that the private investor obtains extra information rent beyond the reservation level of return and the rent decreases with his reported cost.
In some cases, the supplier with the low fixed cost may choose not to serve the high-volume retailer to avoid excessive information rent.
The concern for robustness leads the seller to concede a larger information rent to all buyers with values below the optimal price without uncertainty.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com