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Rent Seeking

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  • Shankha Chakraborty

    (International Monetary Fund)

  • Era Dabla-Norris

    (International Monetary Fund)

Abstract

This paper examines the relationship between rent seeking and economic performance when governments cannot enforce property rights. With imperfect credit markets and a fixed cost to rent seeking, only wealthy agents choose to engage in it, as it allows them to protect their wealth from expropriation. Hence, the level of rent seeking and economic performance are determined by the initial distribution of income and wealth. When individuals also differ in their productivity, not all wealthy agents become rent seekers, and the social costs of rent seeking are typically lower. In both cases, multiple equilibria with different levels of rent seeking and production are possible. Copyright 2006, International Monetary Fund

Suggested Citation

  • Shankha Chakraborty & Era Dabla-Norris, 2006. "Rent Seeking," IMF Staff Papers, Palgrave Macmillan, vol. 53(1), pages 1-2.
    • Handle: RePEc:pal:imfstp:v:53:y:2006:i:1:p:2
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    Cited by:

    1. Iqbal, Nasir & Daly, Vince, 2014. "Rent seeking opportunities and economic growth in transitional economies," Economic Modelling, Elsevier, vol. 37(C), pages 16-22.

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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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