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Thread: Rent-seeking behavior

  1. #1

    Rent-seeking behavior

    Rent-seeing behavior

    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.
    The definition for rent, in this context, comes to us from Adam Smith from the Wealth of Nations.

  2. #2
    within the first sentence of the wiki def, I thought gasolien - yes a typo but I left it.

    thanks for the link and the terms within

  3. #3
    No problem.
    Rent seeking behavior is what destroys commerce and a nation as well.

  4. #4
    Government is one of the ultimate forms of rent-seeking behavior.

  5. #5
    To better understand the term 'rent', let us consider the writings of David Ricardo and Adam Smith.

    There were three parties to production in the past:

    1) land owner
    2) capitalist
    3) workers

    Their incomes respectively are titled:

    1) rents
    2) profits
    3) wages

    Rents are the income of the class, land owners.

    The land owner doesn't really contribute to the production process as much as the capitalist and even less still than the workers.
    I would also argue that the capitalist doesn't contribute much to the production process either.

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