Rent Seeking

Shankha Chakraborty and Era Dabla-Norris
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Shankha Chakraborty: International Monetary Fund
Era Dabla-Norris: International Monetary Fund

IMF Staff Papers, 2006, vol. 53, issue 1, pages 2

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

JEL-codes: D23 D31 D72 O11 (search for similar items in EconPapers)
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