Rent-Seeking Behavior

By Leon Felkins

Written 12/20/96

Last Revised 9/10/09

Whenever you have a situation in which a person or group is in power over a community, some in the community will seek to obtain special favors at the expense of all others in the community. We are all familiar with this situation from our school days where some students would seek special favors -- like a high grade -- at the expense of the other students. Such behavior in the political/economic world is called rent-seeking. It is a very serious problem to our society, costing taxpayers billions of dollars. For example, Archer Daniel Midland (ADM), "Supermarket to the world" has been accused of rent-seeking (also called "corporate welfare" and "political parasitism") to the tune of billions of dollars. And they do this without much prejudice or party favoritism: both the liberals and the conservatives accept huge donations from the company. Of course, we all hear their advertisements of Public Television and certain television talk shows.

Since there are several good essays on rent-seeking available on the internet, I will not discuss it further but instead provide a definition and a few links.

Rent-Seeking Definition

rent-seeking behavior
The expenditure of resources in order to bring about an uncompensated transfer of goods or services from another person or persons to one's self as the result of a "favorable" decision on some public policy. The term seems to have been coined (or at least popularized in contemporary political economy) by the economist Gordon Tullock. Examples of rent-seeking behavior would include all of the various ways by which individuals or groups lobby government for taxing, spending and regulatory policies that confer financial benefits or other special advantages upon them at the expense of the taxpayers or of consumers or of other groups or individuals with which the beneficiaries may be in economic competition.

Links to sites Discussing Rent-seeking

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