1984 Articles

DUP Activities and Economic Theory

Bhagwati, Jagdish N.; Brecher, Richard A.; Srinivasan, T. N.

This paper considers the theory of Directly Unproductive Profit Seeking (DUP) activities, examining its implications for economic theory. Two classes of DUP activities are distinguished: one where the DUP activity is triggered by policy which is itself exogenously specified (e.g., tariff-revenue seeking resulting from pre-specified tariff); the other where DUP activity endogenises policy fully (e.g., tariff seeking). Implications for both positive and normative argumentation in economic theory are considered in depth for both these classes of DUP activity.