Title: Rent-seeking - Wikipedia
Headings: Rent-seeking
Rent-seeking
From Wikipedia, the free encyclopedia
Contents
Description
Tullock paradox
Possible explanations
Examples
Development of theory
Criticism
Possible consequences
See also
References
Further reading
External links

Content: Competition between different politicians eager to offer favors to rent-seekers may bid down the cost of rent-seeking. Lack of trust between the rent-seekers and the politicians, due to the inherently underhanded nature of the deal and the unavailability of both legal recourse and reputational incentives to enforce compliance, pushes down the price that politicians can demand for favors. Rent-seekers can use a small part of the benefit gained to make contributions to the politicians who provided enabling legislation. Examples
Antichristus, a woodcut by Lucas Cranach the Elder, of the pope using the temporal power to grant authority to a ruler contributing generously to the Catholic Church
The classic example of rent-seeking, according to Robert Shiller, is that of a property owner who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee to lower the chain. There is nothing productive about the chain or the collector. The owner has made no improvements to the river and is not adding value in any way, directly or indirectly, except for himself. All he is doing is finding a way to make money from something that used to be free. An example of rent-seeking in a modern economy is spending money on lobbying for government subsidies in order to be given wealth that has already been created, or to impose regulations on competitors, in order to increase market share. Another example of rent-seeking is the limiting of access to lucrative occupations, as by medieval guilds or modern state certifications and licensures. According to some libertarian perspectives, Taxi licensing is a textbook example of rent-seeking.