rent+seeking

Economist, Gordon Tullock created the phrase rent-seeking to explain what occurs when an individual or organization manipulates the economic environment to make money rather than profit from contributions to productivity and overall wealth. Put simply, rent-seeking is the process of “cutting yourself a bigger slice of the cake rather than making the cake bigger” (Anonymous, 2007). Or in other words, rent-seeking is attempting to make more money without producing more for customers. Rent-seeking can occur legally or illegally. In either instance, rent-seeking activities do not create any added value; therefore impose large costs on an economy.
 * Rent-Seeking**

The consequences of rent-seeking behavior can be hazardous as it might be cheaper to purchase a favorable condition (lobbying for government production, for example) instead of creating operational efficencies such as reducting the amount of chemicals released into natural evironments like the air, forests and rivers (Anonymous, 2007A)

• a protection racket, in which the gang takes a cut from the shopkeeper’s profit • a group of firms agreeing to raise prices; • a union demanding higher wages without offering any increase in productivity; • lobbying the government for tax, spending or regulatory policies that benefit the lobbyists at the expense of taxpayers or consumers or some other rivals.
 * Real Life Examples:**

1. What is a disadvantage of rent seeking? a. People want to buy houses instead of renting b. People are not happy staying where they are c. People (or companies) will try to impose regulations or rules to get what they want d. There is no disadvantage to rent seeking
 * Questions:**

Anonymous (2007). //Economics A-Z//. Retrieved March 5, 2007 from, Web site: http://www.economist.com/research/Economics/alphabetic.cfm?term=regulation
 * References:**

Anonymous (2007A). "Rent Seeking" Retrieved April 16, 2007 from, Web site: http://en.wikipedia.org/wiki/Rent_seeking.

Cale Cassel Cory Isom
 * Authors:**