Rent-Seeking

From Big Concept Wiki
Jump to navigation Jump to search

Rent-seeking is an attempt to extract payment in excess of the value created. A rent-seeker will attempt to obtain income via economic rent (ill-gotten gains) by manipulating the economic conditions to their advantage, or parasitizing legitimate economic activity, rather than by creating equivalent value.

The term rent-seeking comes from Georgist economic theory, which posits that, because land comes from nature, payment extracted from land is in excess of the value that landlords actually create. This is on contrast to "exploitation," a term aligned with Marxist economic theory; Marxism holds that capital (rather than land) is a tool for abuse.

Examples of rent-seeking behaviors might include:

  • Taking advantage of regulatory capture to prevent new entrants into the market and therefore holding a monopoly position
  • Political corruption
  • Toll-collecting at a bridge, which crosses the only part of the river narrow enough for a profitable bridge, collecting in excess of the cost to build the bridge
  • Sitting on top of a large number of bread and unused patents in order to sue innovators who might happen to create inventions which fall under the patent