Title: How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy - Center for American Progress
Headings: How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy
How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy
Rent-seeking
A modern example: Tesla Motors
Campaign finance, lobbying, and influence
Campaign contributions lead to policy outcomes
Lobbying leads to policy outcomes
Conclusion

Content: What identifies rent-seeking behavior is that resources are spent in an attempt to influence policy in order to obtain a greater share of benefits. The benefits targeted by rent-seeking vary but include: profits from state-created monopolies, favorable government contracts, beneficial regulations, tariffs that dampen foreign competition, and tax preferences and subsidies. The major economic concerns of rent-seeking can be categorized into three types of inefficiencies: Resources are wasted engaging in rent-seeking. Policies sought by rent-seeking result in an inefficient use of resources. Rent-seeking policies may prove so destructive that they cause resources to sit idle. The first inefficiency created by rent-seeking is that private resources are intentionally wasted on pursuing and competing for rents rather than producing economic gain. An important caveat of this waste is that it is irrelevant whether or not the rent-seeker achieves the sought-after policy goal. What triggers this waste is the fact that time, effort, and resources were diverted away from producing goods or rendering services that others are willing to pay for and instead used to influence policy for private gain.