RENT SEEKING: A SURVEY

RENT SEEKING: A SURVEY I. INTRODUCTION The purpose of this essay is to survey the emerging theory of the rent-seeking society. The initial problem is to clarify terminology. Rent is a venerable concept in economics. Defined as a return in excess of a resource owner’s opportunity cost, economic rent has played a prominent role in the history of economic analysis (‘corn is not high because rent is paid, rent is paid because corn is high’). In this sense it is a fair guess that most economists would consider ‘rent seeking’ to be equivalent to ‘profit seeking’, whereby it is meant that the expectation of excess returns motivates valueincreasing activities in the economy. Such excess returns (positive and negative) are typically viewed as short-lived (quasi-rents) because competition will drive them to normal levels. The competitive dissipation of rents, however, is not what is meant by ‘rent seeking’. Rents emanate from two sources. They arise naturally in the price system by, for example, shifts in demand and supply curves. The pursuit of rents under these circumstances is the sense in which rent seeking is equivalent to profit seeking. Rents can also be contrived artificially through, for example, government action. The fact that rents are http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Kyklos International Review of Social Sciences Wiley

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Publisher
Wiley
Copyright
Copyright © 1982 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0023-5962
eISSN
1467-6435
DOI
10.1111/j.1467-6435.1982.tb00174.x
Publisher site
See Article on Publisher Site

Abstract

I. INTRODUCTION The purpose of this essay is to survey the emerging theory of the rent-seeking society. The initial problem is to clarify terminology. Rent is a venerable concept in economics. Defined as a return in excess of a resource owner’s opportunity cost, economic rent has played a prominent role in the history of economic analysis (‘corn is not high because rent is paid, rent is paid because corn is high’). In this sense it is a fair guess that most economists would consider ‘rent seeking’ to be equivalent to ‘profit seeking’, whereby it is meant that the expectation of excess returns motivates valueincreasing activities in the economy. Such excess returns (positive and negative) are typically viewed as short-lived (quasi-rents) because competition will drive them to normal levels. The competitive dissipation of rents, however, is not what is meant by ‘rent seeking’. Rents emanate from two sources. They arise naturally in the price system by, for example, shifts in demand and supply curves. The pursuit of rents under these circumstances is the sense in which rent seeking is equivalent to profit seeking. Rents can also be contrived artificially through, for example, government action. The fact that rents are

Journal

Kyklos International Review of Social SciencesWiley

Published: Nov 1, 1982

References

  • On the Welfare Cost of Transfers
    Browning, Browning
  • The Welfare Costs of Tariffs, Monopolies, and Theft
    Tullock, Tullock
  • More on the Cost of Transfers
    Tullock, Tullock

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