Rent-seeking: Difference between revisions

The term rent, in the narrow sense of [[economic rent]], was coined by the British 19th-century economist [[David Ricardo]],<ref>{{cite web |url=http://www.econlib.org/library/Enc/RentSeeking.html |title=Rent Seeking |last= Henderson|first= David R. |author-link=David R. Henderson |publisher=[[Econlib.org]]}}<!-- This is an original essay by Henderson, not available via other sources. --></ref> but rent-seeking only became the subject of durable interest among economists and political scientists more than a century later after the publication of two influential papers on the topic by [[Gordon Tullock]] in 1967,<ref>{{cite journal |last=Tullock |first=Gordon |year=1967 |title=The Welfare Costs of Tariffs, Monopolies and Theft |journal=Western Economic Journal |volume=5 |pages=224–232}}</ref> and [[Anne Krueger]]<ref name=Krueger1974>{{cite journal |last=Krueger |first=Anne |year=1974 |title=The Political Economy of the Rent-Seeking Society |journal=American Economic Review |volume=64 |issue=3 |pages=291–303 |jstor=1808883}}</ref> in 1974. The word "rent" does not refer specifically to payment on a lease but rather to [[Adam Smith]]'s division of incomes into [[Profit (economics)|profit]], wage, and economic rent. The origin of the term refers to gaining control of [[land (economics)|land]] or other natural resources. {{Citation needed|date=November 2022}}

''Rent-seeking'' is an attempt to obtain [[economic rent]] (i.e., the portion of income paid to a [[factor of production]] in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by [[value added|creating new wealth]]. Rent-seeking implies extraction of uncompensated value from others without making any contribution to [[productivity (economics)|productivity]]. Because the nature of rent-seeking implies a fixed cost payment, only wealthy participants engage in these activities as a means of protecting their wealth from expropriation.<ref>{{cite book |last=Chakraborty |first=Shankha |year=2005 |title=Rent Seeking |journal=IMF Working Papers |volume=05 |publisher=International Monetary Fund |issue=43 |page=1 |doi=10.5089/9781451860627.001 |isbn=9781451860627 |s2cid=15557383 | issn=1018-5941}}</ref>