IMF Working Papers

Rent Seeking

By Shankha Chakraborty, Era Dabla-Norris

March 1, 2005

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Shankha Chakraborty, and Era Dabla-Norris. Rent Seeking, (USA: International Monetary Fund, 2005) accessed November 8, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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 of rent seeking, only wealthy agents choose to engage in it, since it enables 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.

Subject: Comparative advantage, Consumption, Income, Income distribution, Income inequality

Keywords: Rent seeker, Rent seeking, WP

Publication Details

  • Pages:

    28

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2005/043

  • Stock No:

    WPIEA2005043

  • ISBN:

    9781451860627

  • ISSN:

    1018-5941

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