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: With recent court rulings knocking down important restrictions on money in politics, rent-seekers will have even greater opportunity to seek special favors, doing further harm to the economy. Rent-seeking
Most economists agree that rent-seeking causes a net societal loss that harms the economy. Rent-seeking involves spending resources to influence a division of profits, instead of creating a good or service that other businesses or individuals are willing to pay an amount that exceeds the cost of producing said good or service. While rent-seeking exists in both private and public forms, the scope of this paper is the discussion public rent-seeking and specifically two public rent-seeking activities—lobbying and campaign funding. When engaging in rent-seeking from public institutions, businesses and individuals may seek favors from the government through both legal activities—lobbying and contributing to political campaigns—and illegal strategies—bribery and corruption. 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.