In economics,
rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value. An example of rent-seeking is the limitation of access to skilled occupations imposed by medieval guilds.
Many current studies of rent-seeking focus on efforts to capture various
monopoly privileges stemming from government regulation of free enterprise competition. The term itself derives, however, from the far older practice of appropriating a portion of production by gaining ownership or control of land.
Description of concept
Rent-seeking generally implies the extraction of uncompensated value from others without making any contribution to productivity, such as by gaining control of land and other pre-existing natural resources, or by imposing burdensome regulations or other government decisions that may affect consumers or businesses. Rent-seeking agents will spend money in socially unproductive ways, such as political lobbying, in order to attain, maintain or increase monopoly power.
In modern industrialized countries, economic benefits derived by most people involve some form of rent-seeking, but in the aggregate such behaviors may result in substantial social losses.
Studies of rent-seeking focus on efforts to capture special monopoly privileges such as government regulation of free enterprise competition.[1]
The term "monopoly privilege rent-seeking" is an often-used label for the former type of rent-seeking. Often-cited examples include a farm lobby that seeks tariff protection or an entertainment lobby that seeks expansion of the scope of copyright. Other rent-seeking is held to be associated with efforts to cause a redistribution of wealth --- by shifting the government tax burden or government spending allocation, for instance.
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