Title: Rent-seeking - Definition, Common Examples, and Tullok Paradox
Headings: Rent-seeking
Rent-seeking
What is Rent-seeking?
Origins of Rent-seeking
The Tullock Paradox
Examples of Rent-seeking Activities
Related Readings

Content: Origins of Rent-seeking
The concept of rent-seeking was developed by American economist Gordon Tullock in 1967. However, the term was offered by another economist, Anne Krueger. In this case, the term “rent” is referred to as one of the sources of income generation that was conceptualized by Adam Smith. According to Smith, rent is an activity of lending one’s own resources in exchange for some benefits. Relative to other sources of income (profit, wages), rent is the least risky and the least labor-demanding source of income. The Tullock Paradox
The corrupt politicians utilize their bureaucratic power to engage in rent-seeking activities. In order to gain certain benefits, the rent-seekers may bribe politicians. However, G. Tullock determined that there is a significant difference between the cost of rent-seeking (bribery) and the gains from this practice. This paradox is called the Tullock Paradox. The Tullock Paradox states that rent-seekers generally obtain large financial and economic gains at an enormously small cost.