The theory of rent-seeking is a hot topic in the Economic society. It is also one of the most challenging subjects in research. The behavior of rent-seeking is a common phenomenon in the market economy. Rent-seeking is a non-productive form economic gambling, leading to the waste of Social resources, repression of fair competitions, refusal of system creation, and resistance of social civilization. Therefore, it is of both theoretical and practical significance to analyze the problem of rent-seeking in the government to probe into the methodology of supervising and controlling the behavior of rent-seeking. This paper starts with a review on the theory of rent-seeking, and proceeds with an analysis on the government behavior. Finally, suggestions are reached to renovate the problems in the current government. There are three parts in the paper. First, is a general discussion of the definition and classification of rent-seeking, the review of major theoretical schools of rent-seeking, and the system environment, cost and aftereffect of rent-seeking. Second, focuses on the basic theory of the government’s behavior of rent-seeking, including the causation, evolution and the effect on the development of economics in our society. Last, I will discuss the types and reasons for political and social inequalities created by rent-seeking.
Rent-seeking in a modern economy is spending money on political lobbying for government benefits or subsidies in order to be given a share of wealth that has already been created, or to impose regulations on competitors, in order to increase market share.The concept of rent-seeking would apply to corruption of bureaucrats who solicit and extract bribe or rent for applying their legal but discretionary authority for awarding legitimate or illegitimate benefits to clients.
Regulatory capture is a related concept which refers to collusion between firms and the government agencies assigned to regulate them, which is seen as enabling extensive rent-seeking behavior, especially when the government agency must rely on the firms for knowledge about the market. Studies of rent-seeking focus on efforts to capture special monopoly privileges such as manipulating government regulation of free enterprise competition. The term monopoly privilege rent-seeking is an often-used label for this particular type of rent-seeking. Often-cited examples include a lobby that seeks economic regulations such as tariff protection, quotas, subsidies, or extension of copyright law.
Inequality means there is a gap between the highest income earners and the lowest income earners. On the one hand, you can argue inequality is necessary for providing incentives in a free market economy; without a degree of inequality there would be economic stagnation and lack of enterprise. On the other hand, you could argue that inequality has many disadvantages and is evidence of fundamental problems in society.
Arguably, inequality is a type of market failure. Market failure occurs when there is an inefficient allocation of resources in a free market. If firms have monopoly power, they are in a position to set higher prices to consumers. This leads to a redistribution of income from consumers to the shareholders of monopolies. Here, the inequality is based on an unfair distribution of power in society. Monopoly
earn more rent. The perspective of the residual theory of land value is that the 3 mobile factors have to get paid first, in order to keep them from running away if they don’t get paid an amount equal to what they could earn elsewhere, something that land cannot do. 4.3 The bid-rent is the maximum rent that a potential user would bid or be willing to pay, for a site or location. This bid-rent is essentially the same thing as the residual value. Each potential user of land has a bid-rent curve, which…
rentier states is how they are doomed to failure in the long-term. The highlights to this theory are the vulnerabilities of a mono-producer, the disparities in rentier economies, and the social and political repercussions that result from this. The most important characteristic of a rentier state is how highly dependant the country is on one source of income. With massive revenues generated by external rent, it liberates the state from ever needing to extract income from the domestic economy. This…
performance. 2.2 Aspects of contingency theory of action and job performance 2.2.1Individual aspects 2.3.1Knowledge 2.3.2Skills of effective manager 2.3.3 Importance and purpose of soft skills of manger 2.4 Job demand 2.4.1 Primary purpose 2.4.2Key accountabilities 2.4.2.1 Responsibility 2.4.3 Duties 2.4.4 Position requirements 2.4.5 Internal contacts 2.5 Organizational environment 2.5.1 Introduction of Enterprise rent a car 2.5.2 Organisation culture 3.0 Application process 3…
Persuasive speech is the most commonly used type of speech. The speaker should be able to connect with his/her audience. Therefore, the speaker should be aware of what the audience likes or prefers. The following paper seeks to explore some of the main theories…
Investment, Government spending, or Net Exports increase. Aggregate supply curve is a curve that shows the quantity of goods and services that firms choose to produce and sell at each price level. Sticky wage theory: Nominal wages may increase at the expected rate of inflation. Sticky price theory: Some prices adjust slowly because of menu costs. What shifts the long run supply will shift the short run supply curve plus sellers price expectations. An increase in the expected price level decreases the…
Economics 1. An externality arises when one party directly conveys a benefit or cost to others (Png, 2007), a negative externality arises when one party imposes a cost on another, so the cost of producing a good or service is borne by others likewise a positive externality is when there is a beneficial effect on third parties from the decisions of consumers and producers. Externalities of the positive or negative variety create a problem in the functioning of the market to maximise the total…
features than the other software in the marketplace. Within two years QuickBooks went from 0% market share to 80% market share. (Eucner, January, 1 2011, p.13) ------------------------------------------------- People flock to Redbox day and night to rent their movies while Blockbuster continues to struggle, and is closing their brick and mortar stores in huge numbers and had to file for bankruptcy. Blockbuster has had a hard time adjusting to an industry that was once a growth industry when their…
economists, promoting the idea of liberal economic theories which lay the groundwork for many of the contemporary economic thought. Both Smith and Ricardo’s opposition of mercantilism play a large role in the decline of the system, whilst their liberal, free market approach remains present in current economics; thus indicating that both individuals have made significant contributions to the tradition of political economy. In this essay, the theories and views of Smith will be explored and criticism…
peoples desire to own property rather then rent. This would cause the management company to lower its prices to attract new customers. The equilibrium price dropped due to a decrease in demand, but the supply never changed. If on the other hand the supply curve were to shift right it would show a greater number of apartments available to rent. This could happen if the company was to expand their apartment building to gain additional apartments to rent. If there was no increase in the demand for…
most productive when ruled over by rules and limitations with regards to trade, and that in order for markets to maximise prosperity, a free trade environment should be made accessible. In this essay I intend to asses the way in which many of Smiths theories taken directly form his works can be applied to past and current situations, first from an economic then social, and then a political point of view. I will also…