Title: What Is Rent-Seeking Behavior?
Headings: What Is Rent-Seeking Behavior?
What Is Rent-Seeking Behavior?
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Voluntary trade benefits both sides. Unless both parties believe they will benefit from the exchange, they will not consent. In most exchanges both parties can produce the item they are trading more efficiently than they can produce what they are receiving. Producing a surplus of one item provides each party something to trade for someone else's surplus. Having more than your family needs opens the opportunity to trade the excess for profit. Unfortunately, when property rights are weakened and the ownership of someone's wealth or goods is debatable, people can gain more by trying to appropriate that wealth than by producing themselves. This behavior is called rent-seeking. Rent-seeking frequently requires spending your own resources so you own someone else's surplus in the end. In the public sector, for example, government lobbyists are hired to sway public policy to benefit their companies and punish their competitors.