This paper examines the implications of the asymmetries in the tax treatment of corporate profits and losses for the theory of the competitive firm under uncertainty. It is shown that the tax asymmetry introduces a curvature into the firm's target function which affects its behavior in the short...

We would like to thank Gordon Tullock and an anonymous referee of this journal for their helpful comments and suggestions.

In recent years, there has been a large number of papers on the subject of rent seeking. Most such works on rent seeking have taken the rent as exogenously determined by regulators. Regulators, howeve r, may also be expected (and indeed have been shown) to be rent seeke rs and hence the...