Improper selection of high-cost producers in the rent-seeking contest

The resources two rival businesses spend to raise their own chance of getti ng a unique monopoly license are a cost of rent-seeking. When those busines ses differ in the costs of producing the monopoly good there is an addition al cost of rent-seeking that has not been sufficiently studied in the liter ature. If the high cost producer wins the license, the difference between h is cost and the costs of his more efficient rival is a social loss from imp roper selection of producers by the political process. The loss becomes mor e severe when the ability to lobby of the inefficient producer outstrips th at of the efficient producer. This may help to explain why specialized lobb ying evolved. Specialized lobbying reduces the social cost from improper se lection of firms by allowing efficient producers to hire expert rent-seeker s and so to raise their chances of gaining monopoly concessions.