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Who pays for rent seeking?

16 十二月, 2015 - 15:24

Industries in which rent seeking is most prevalent tend to be those in which the potential for economic profits is greatest – monopolies or near-monopolies. These, therefore, are the industries that allocate resources to the preservation of their protected status. We do not observe laundromat owners or shoe-repair businesses lobbying in Ottawa. Rent seeking is an additional cost that must be borne by the producer and increases her total costs. Such lobbying is therefore costly both to the monopolist and society at large – not only does the existence of a monopoly cause resource inefficiencies, but in addition resources are used to preserve this inefficient market structure.